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As filed with the Securities and Exchange Commission on July 16, 1996
Registration No. 33-_____

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

LOMAK PETROLEUM, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 1311 34-131257
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) CODE NUMBER)

JOHN H. PINKERTON, PRESIDENT
LOMAK PETROLEUM, INC.
500 THROCKMORTON STREET FORT WORTH, TEXAS 76102
(817) 870-2601
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES AND OF AGENT FOR SERVICE)

Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

=============================================================================================================================
Proposed Proposed
Maximum Maximum
Amount to be Offering Price Aggregate Amount of
Title of Each Class of Securities to be Registered Registered Per Unit(1) Offering Price(1) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------

Common Stock, $.01 par value 5,000,000 $13.75 $68,750,000 $23,707
=============================================================================================================================

(1) Estimated solely for the purpose of computing the registration fee. This
amount was calculated pursuant to Rule 457(c) under the Securities Act of
1933, as amended, based on a price of $13.75 the last sale of Common Stock
of Lomak Petroleum, Inc., reported on the Nasdaq National Market on July
12, 1995).

The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

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LOMAK PETROLEUM, INC.

CROSS REFERENCE SHEET
BETWEEN
ITEMS IN PART I OF THE REGISTRATION STATEMENT (FORM S-1)
AND PROSPECTUS PURSUANT TO ITEM 501(B) OF REGULATION S-K

Item of Form S-1 Location in Prospectus
- --------------------------------------------------------------------------- ------------------------------------------------

1. Forepart of Registration Statement and Outside Front Cover Page Outside Front Cover Page
of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Prospectus Summary and Risk Factors
Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Securityholders Selling Securityholders
8. Plan of Distribution *
9. Description of Securities to be Registered Description of Capital Stock
10. Interests of Named Experts and Counsel Legal Opinions; Experts
11. Information With Respect to Registrant Prospectus Summary; Risk Factors; Price Range
of Common Stock and Dividend Policy; Selected
Historical and Pro Forma Financial Data;
Management's Discussion and Analysis of
Financial Condition and Results of Operations;
Business; Management; Principal Stockholders
and Share Ownership of Management; and Certain
Transactions
12. Disclosure of Commission Position on Indemnification for Securities *
Act Liabilities

- ----------

* Not applicable or answer is negative

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SUBJECT TO COMPLETION DATED JULY 16, 1996

PROSPECTUS
----------

5,000,000 SHARES
LOMAK PETROLEUM, INC.
COMMON STOCK

The shares being registered are common stock, $.01 par value per share
("Common Stock"), of Lomak Petroleum, Inc., a Delaware corporation (the
"Company"). The Company is an independent oil and gas company with core
operations in Texas, Oklahoma and Appalachia.

This Prospectus covers 5,000,000 shares of Common Stock ("Shares"), of
which 4,960,000 shares may be issued from time to time in the purchase of oil
and gas companies, operations, and assets (collectively "Interests"). It is
anticipated that such acquisitions will principally serve to expand existing
assets and operations. The consideration offered will consist primarily of
Shares, cash, notes, assumption of liabilities or a combination thereof. In
addition, the Company may enter into consulting and non-competition agreements
with the owners and key executives of the sellers of Interests. The terms of
acquisitions will be determined in negotiations between the Company and the
persons controlling the Interests involved. Factors taken into account in
evaluating purchases include, without limitation, cash flow, growth potential,
reserves, undeveloped leases and other assets, including real estate and
equipment. It is anticipated that the shares issued in acquisitions will be
valued in relation to the then market value of the Common Stock as quoted on the
Nasdaq National Market ("Nasdaq').

The Shares may be issued by the Company from time to time. The Shares
include (i) 40,000 Shares issuable upon the exercise of 40,000 warrants to
purchase Common Stock at an exercise price of $7.50 per share (See "Warrant
Shares") and (ii) 4,960,000 Common Shares which may be issued from time to time
in connection with the purchase of Interests.

SEE "RISK FACTORS" BEGINNING ON PAGE 12 OF THIS PROSPECTUS FOR A
DESCRIPTION OF FACTORS WHICH SHOULD BE CONSIDERED IN
RELATION TO AN INVESTMENT IN THE SHARES.

Underwriting discounts or commissions are not expected to be paid by
the Company in connection with the issuance of Shares. However, finders fees
consisting of Common Stock or cash may be paid in certain instances. Any person
receiving such fees may be deemed to be an underwriter within the meaning of the
Securities Act of 1933, as amended. All expenses of this offering will be paid
by the Company.

----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE

----------------

The Common Stock is traded on Nasdaq under the symbol "LOMK." On July
12, 1996 the closing price was $13.75.

----------------------------------------

THE DATE OF THIS PROSPECTUS IS JULY 16, 1996

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AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports with the Securities and Exchange Commission
(the "Commission"). Reports filed by the Company with the Commission pursuant to
the informational requirements of the Exchange Act may be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20540, and at the regional
offices of the Commission at 7 World Trade Center, New York, New York 10048 and
at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

ADDITIONAL INFORMATION

The Company has filed with the Commission a registration statement on
Form S-1 (herein together with all amendments, exhibits and schedules, referred
to as the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the securities offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to are not necessarily complete; with respect to each
such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. A copy of the Registration
Statement may be inspected without charge at the offices of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part
thereof may be obtained from the Commission upon the payment of certain fees
prescribed by the Commission.

The Company will provide without charge to any beneficial owner of
Common Stock to whom a copy of this Prospectus is delivered, upon written
request, a copy of the Registration Statement. Requests should be directed to
the Company, to the attention of the Secretary, at 500 Throckmorton Street, Fort
Worth, Texas 76102.

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OUTSTANDING SECURITIES COVERED BY THIS PROSPECTUS

This prospectus has been prepared for use by persons who receive Shares
covered by the Registration Statement in acquisitions or for the exercise of
40,000 warrants to purchase Common Stock and who may be entitled to offer such
shares under circumstances requiring the use of a prospectus. However, no
stockholder is authorized to use this Prospectus for any offer of Common Stock
without the consent of the Company. With respect to the persons mentioned above,
this Prospectus is not an offer of Common Stock by the Company. Such offers will
be made only by means of a Post-Effective Amendment or Supplement to the
Registration Statement. The Company may consent to the use of this Prospectus at
such time offers are made for a limited period of time by stockholders and
subject to limitations and conditions which may vary. Resales of such shares may
be made on Nasdaq, in private transactions or pursuant to an underwriting.

Agreements with stockholders permitting use of this Prospectus may
provide that sales be effected in an orderly manner through securities dealers,
acting as broker or dealer, selected by the Company; that stockholders enter
into custody agreements; and that sales be made only by one or more of the
methods described in this Prospectus, as appropriately supplemented or amended
pursuant to a Supplement when required. Stockholders may be deemed to be
underwriters within the meaning of the Securities Act.

When resales are to be made through a broker or dealer selected by the
Company, it is anticipated that a member firm of the National Association of
Securities Dealers, Inc. ("NASD") will be engaged to act as the stockholders'
agent in the sale of the shares. The NASD member firm effecting such a
transaction for a stockholder may receive compensation in the form of
underwriting discounts, concessions or commissions from the stockholder and/or
the purchasers of the shares of Common Stock for whom they may act as agent
(which compensation may be in excess of customary commissions). Sales of shares
of Common Stock by such an NASD member firm may be made on Nasdaq from time to
time at prevailing prices. Any such sales may be by block trade. Any such broker
or dealer effecting a sale of shares for a stockholder may be deemed to be an
underwriter within the meaning of the Securities Act and any commissions earned
by such firm may be deemed to be underwriting discounts and commissions under
the Securities Act.

No person is authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering made hereby. If given or made, such information or
representations must not be relied on as having been authorized. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy the
securities to which it relates in any jurisdiction in which, or to any person to
whom, it is unlawful to make such an offer or solicitation. Neither the delivery
of this Prospectus nor any offer or sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
information set forth herein or in the affairs of the Company since the date
hereof.

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PROSPECTUS SUMMARY

The following is qualified in its entirety by the more detailed
information, Consolidated Financial Statements, Pro Forma Combined Financial
Statements and notes thereto, appearing elsewhere in this Prospectus. Unless the
context requires all references herein to the "Company" or "Lomak" include Lomak
Petroleum, Inc. and its consolidated subsidiaries.

Pro forma information gives effect to (i) the purchase by the Company
of certain oil and gas properties from a subsidiary of Parker & Parsley
Petroleum, Inc., (ii) the purchase by the Company of certain oil and gas
properties from Transfuel, Inc. ("Transfuel") and (iii) the purchase by the
Company of certain oil and gas properties from Bannon Energy Incorporated
("Bannon") (collectively referred to as the "Acquisitions"). The unaudited pro
forma combined financial statements also give effect to the private placement of
$2.03 Convertible Exchangeable Preferred Stock and Common Stock (the "Private
Placements") and the application of the net proceeds therefrom.

THE COMPANY

Lomak is an independent oil and gas company with core areas of
operation in Texas, Oklahoma and Appalachia. The Company has grown through a
combination of acquisition, development and enhancement activities. Since
January 1, 1991, 59 acquisitions have been consummated at a total cost of
approximately $249 million and approximately $24 million has been expended on
development activities. As a result, proved reserves and production have each
grown during this period at an average rate of 56% per annum. At December 31,
1995, proved reserves totaled 298 Bcfe, having a pre-tax present value at
constant prices on that date of $229 million and a reserve life of nearly 12
years. The Company as of December 31, 1995, operated over 6,200 properties which
accounted for more than 93% of its reserves. In addition, the Company owns and
operates approximately 1,900 miles of gathering systems in proximity to its
principal gas properties. The Company also provides oil field services,
including brine disposal and various well services primarily for certain of its
own properties. The operations of the Company are considered to fall within a
single industry segment; the exploration for, development and production of
crude oil and natural gas.

BUSINESS STRATEGY

The Company's objective is to increase its asset base, cash flow and
earnings through a balanced strategy of acquisition, development and enhancement
activities in each of its current core operating areas of Texas, Oklahoma and
Appalachia. In each core area, the Company establishes separate acquisition,
engineering, geological, operating and other technical expertise. By
implementing its strategy and focusing on each core area in this manner, the
Company does not depend solely on any one activity type or region to expand its
asset base, cash flow and earnings. To the extent purchases continue to be made
in core areas, operating, administrative, drilling and gas marketing
efficiencies should continue to be realized.

The Company focuses primarily on acquisitions with prices of less than
$30 million, where consolidation is likely, and those areas that it believes to
be less competitive and to have a lower risk profile and longer reserve life
than many alternate opportunities. Management believes smaller producing
properties can be acquired at a lower relative cost than larger properties and
that its focus on these properties, in part, has accounted for its ability to
acquire 396 Bcfe of proved reserves since 1991 at an average cost of $.59 per
Mcfe, well below the independent producer industry average of $.69 per Mcfe, as
reported in Arthur Andersen LLP's Oil and Gas Reserve Disclosure Survey.

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ACCOMPLISHMENTS

Despite periods of low energy prices prevalent since 1990, the
Company's strategy and emphasis on cost control has resulted in significant
growth in assets and reserves, and increased per share cash flow and earnings.
Specifically, from January 1, 1990 through December 31, 1995, the Company has
grown its asset base from $7 million to $215 million, while cash flow per share
has risen from $.41 to $1.75 and earnings per share has increased from
break-even to $.31. The Company has increased its financial and organizational
strength and has begun to benefit from cost reductions and operating
efficiencies. From 1990 through December 31, 1995, combined operating and
overhead costs per Mcfe were reduced from $2.59 to $0.98.

RISK FACTORS

Prior to making an investment decision, prospective investors should
carefully review various risk factors, including capital availability, reserves
available for purchase, accuracy of reserve estimates and the volatility of oil
and gas prices. See "Risk Factors."

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SUMMARY FINANCIAL, OPERATING AND RESERVE INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND OPERATING AND RESERVE DATA)

The following tables set forth certain historical and pro forma
financial, operating and reserve information. The pro forma financial, operating
and reserve information includes the Acquisitions and the Private Placements.
See "Selected Historical and Pro Forma Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
historical data should be read in conjunction with the historical Consolidated
Financial Statements included herein. The pro forma information should be read
in conjunction with the Pro Forma Combined Financial Statements included herein.
Neither the historical nor the pro forma results are necessarily indicative of
future results.

THREE MONTHS ENDED
MARCH 31,
YEAR ENDED DECEMBER 31, (UNAUDITED)
--------------------------------------------------------------- --------------------------------
PRO FORMA PRO FORMA
1991 1992 1993 1994 1995 1995 1995 1996 1996
-------- -------- -------- -------- -------- -------- -------- -------- --------

INCOME STATEMENT DATA:
Revenues
Oil and gas sales $ 5,384 $ 7,703 $ 11,132 $ 24,461 $ 37,417 $ 54,966 $ 7,430 $ 16,088 $ 17,791
Field services 3,966 5,283 6,966 7,667 10,097 10,097 2,464 3,300 3,300
Gas transportation and
marketing 279 332 559 2,195 3,284 3,284 786 1,028 1,028
Interest and other 939 577 418 471 1,317 1,317 223 97 97
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total revenues 10,568 13,895 19,075 34,794 52,115 69,664 10,903 20,513 22,216
-------- -------- -------- -------- -------- -------- -------- -------- --------
Expenses
Direct operating 2,165 3,019 4,438 10,019 14,930 20,985 3,150 5,758 6,320
Field services 2,579 3,951 5,712 5,778 6,469 6,469 1,598 2,529 2,529
Gas transportation and
marketing -- 7 13 490 849 849 199 290 290
General and administrative 2,208 1,915 2,049 2,478 2,736 2,874 758 918 956
Exploration 5 49 86 359 512 512 130 180 180
Interest 672 952 1,120 2,807 5,584 7,921 1,156 1,554 2,136
Depletion, depreciation and
amortization 2,387 3,124 4,347 10,105 14,863 21,643 3,000 5,278 5,879
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total expenses 10,016 13,017 17,765 32,036 45,943 61,253 9,991 16,507 18,290
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income before taxes 552 878 1,310 2,758 6,172 8,411 912 4,006 3,926
Income taxes (125) (192) 81 (139) (1,782) (2,145) (117) (1,403) (1,374)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income $ 427 $ 686 $ 1,391 $ 2,619 $ 4,390 $ 6,266 $ 795 $ 2,603 $ 2,552
======== ======== ======== ======== ======== ======== ======== ======== ========
Net income applicable to
common shares $ 57 $ 392 $ 1.062 $ 2,244 $ 3,659 $ 4,466 $ 701 $ 1,926 $ 1,875
======== ======== ======== ======== ======== ======== ======== ======== ========

Net income per share $ 0.01 $ 0.08 $ 0.18 $ 0.25 $ 0.31 $ 0.36 $ 0.07 $ 0.14 $ 0.14
======== ======== ======== ======== ======== ======== ======== ======== ========

Dividend per share $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.01 $ 0.01 $ 0.00 $ 0.01 $ 0.01
======== ======== ======== ======== ======== ======== ======== ======== ========

Average shares outstanding 4,154 4,682 5,853 9,051 11,841 12,251 10,555 13,691 13,691

CASH FLOW DATA:
Net income $ 427 $ 686 $ 1,391 $ 2,619 $ 4,390 $ 4,466 $ 795 $ 2,603 $ 2,552
Depletion, depreciation and
amortization 2,387 3,124 4,347 10,105 14,863 21,643 3,000 5,278 5,879
Deferred income taxes -- -- (150) 118 1,696 1,850 101 1,323 1,296
-------- -------- -------- -------- -------- -------- -------- -------- --------
Subtotal 2,814 3,810 5,588 12,842 20,949 27,959 3,896 9,204 9,727
Other non-cash items (553) (278) (321) (471) (1,564) N/A (127) (72) N/A
Changes in working capital (1,071) 1,636 (962) (1,130) (2,824) N/A (2,079) 2,892) N/A
-------- -------- -------- -------- -------- -------- --------
Net cash provided from
operating activities $ 1,190 $ 5,168 $ 4,305 $ 11,241 $ 16,561 N/A $ 1,690 $ 6,240 N/A
======== ======== ======== ======== ======== ======== ========

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SUMMARY FINANCIAL, OPERATING AND RESERVE INFORMATION (CONTINUED)

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND OPERATING AND RESERVE DATA)

THREE MONTHS ENDED
MARCH 31,
YEAR ENDED DECEMBER 31, (UNAUDITED)
------------------------------------------------- -------------------
PRO FORMA
1991 1992 1993 1994 1995 1996 1996
------- ------- ------- -------- -------- -------- --------

BALANCE SHEET DATA:

Working capital $ 72 $ 167 $ 1,350 $ 1,002 $ 4,439 $ 4,253 $ 4,699

Oil and gas properties, net 16,261 18,271 55,310 112,964 176,702 191,492 226,946

Total assets 24,332 28,328 76,333 141,768 214,664 232,207 268,212

Long-term debt 11,688 12,679 30,689 61,885 83,035 95,090 130,990

Stockholders' equity 7,962 9,504 32,263 43,248 99,243 101,146 101,146

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------------------------------------- -------------------
Pro Forma Pro Forma
1991 1992 1993 1994 1995 1995 1996 1996
------ ------ ------- ------- ------- ------- ------- -------

OPERATING DATA:
Production
Oil (Bbl) 129 199 318 640 913 1,047 261 279
Gas (Mcf) 1,334 1,796 2,590 6,996 12,471 21,314 4,983 5,784
Mcfe 2,108 2,990 4,498 10,836 17,949 27,595 6,547 7,459
Revenues
Oil $2,438 $3,660 $ 5,118 $ 9,743 $15,133 $17,357 $ 4,544 $ 4,887
Gas 2,946 4,043 6,014 14,718 22,284 37,609 11,544 12,904
------ ------ ------- ------- ------- ------- ------- -------
Total $5,384 $7,703 $11,132 $24,461 $37,417 $54,966 $16,088 $17,791
====== ====== ======= ======= ======= ======= ======= =======
Average Sales Price
Oil (Bbl) $18.91 $18.40 $ 16.07 $ 15.23 $ 16.57 $ 16.58 $ 17.43 $ 17.50
Gas (Mcf) $ 2.21 $ 2.25 $ 2.32 $ 2.10 $ 1.79 $ 1.76 $ 2.32 $ 2.23
Mcfe $ 2.56 $ 2.58 $ 2.47 $ 2.26 $ 2.08 $ 1.99 $ 2.46 $ 2.39
Average Operating
Cost Per Mcfe $ 1.03 $ 0.99 $ 0.98 $ 0.93 $ 0.83 $ 0.76 $ 0.88 $ 0.85

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SUMMARY FINANCIAL, OPERATING AND RESERVEINFORMATION (CONTINUED

(IN THOUSANDS, EXCEPT PERSHARE AMOUNTS AND OPERATING AND RESERVE DATA)

Year Ended December 31,
---------------------------------------------------------------------------------------
Pro Forma
1991 1992 1993 1994 1995 1995
---------- ---------- ----------- ------------ ----------- ------------

RESERVE DATA(2):
Crude oil (MBbl)
Developed 1,609 1,643 3,344 6,430 8,880 10,603
Undeveloped 245 337 1,195 2,019 1,983 4,133
-------- -------- -------- -------- -------- --------
Total 1,854 1,980 4,539 8,449 10,863 14,736
======== ======== ======== ======== ======== ========
Natural gas (MMcf)
Developed 8,318 13,171 38,373 97,251 174,958 229,180
Undeveloped 221 4,444 36,190 52,119 57,929 86,141
-------- -------- -------- -------- -------- --------

Total 8,539 17,615 74,563 149,370 232,887 315,321
======== ======== ======== ======== ======== ========

Total equivalent units (MMcfe) 19,663 29,495 101,797 200,064 298,068 403,735
======== ======== ======== ======== ======== ========

Percent gas reserves 43% 60% 73% 75% 78% 78%

Reserve life index (years)(3) 9.3 9.9 12.6 13.3 11.8 14.2

Estimated future net cash flow
(thousands)(4) $32,481 $48,016 $140,892 $270,974 $412,638 $553,531

Pre-tax present value $19,651 $26,035 $65,114 $150,536 $229,238 $299,341
(thousands)(4)

Producing wells
Gross 1,049 1,113 2,057 3,134 6,596 7,088
Net 283 355 981 1,621 4,965 5,331
Average working interest 27% 32% 48% 52% 75% 75%

Gross operated wells 1,009 1,011 1,872 2,565 6,222 6,711

(1) See the Pro Forma Combined Financial Statements included herein for a discussion of the preparation of this data.
(2) For limitations on the accuracy and reliability of reserves and future net cash flow estimates, see "Risk
Factors-Uncertainty of Estimates of Reserves and Future Net Revenues."
(3) The reserve life index is calculated by dividing the proved reserves (on an Mcfe basis) by projected production
volumes for the next twelve months.
(4) See Glossary included herein for the definition of "Present Value of Proved Reserves."

MARKET PRICES AND DIVIDENDS

On July 12, 1996 the closing price for a share of the Company's Common
Stock was $13.75. For price ranges of the Company's Common Stock since January
1, 1994, see "Price Range of Common Stock and Dividend Policy."

Quarterly dividends of $.01 per share were initiated on the Common
Stock in December 1995. The $2.03 Convertible Preferred Stock receives
cumulative quarterly dividends at the annual rate of $2.03 per share. If there
is any arrearage in dividends on Preferred Stock, the Company may not pay
dividends on Common Stock. Presently, the Company is not in arrears in the
payment of preferred dividends. Additionally, under the terms of the Credit
Agreement, the Company is restricted from paying preferred dividends unless
various covenants relating to net worth, working capital maintenance and
financial ratio requirements have been met.

The Company currently retains substantially all of its earnings to
support the development of its business. Any future determination as to the
payment of dividends will be at the discretion of the Board of Directors of the
Company, and will depend on the Company's financial condition, results of
operations and capital requirements, and such other factors as the Board of
Directors deems relevant. In addition, the Company's bank credit facility limits
the amount of cash dividends that can be paid in one year to 75% of the
Company's net income, plus the cumulative net proceeds from all equity offerings
completed after January 1, 1996.

RISK FACTORS
Prior to making an investment decision, prospective investors should
carefully consider, together with the other information contained in this
Prospectus, the following risk factors:

VOLATILITY OF OIL AND GAS PRICES

The Company's revenues and profitability are substantially dependent
upon prevailing prices of, and demand for, oil and gas and the costs of
acquiring, finding, developing and producing reserves. Historically, the markets
for oil and gas have been volatile and are likely to continue to be volatile in
the future. Prices for oil and gas are subject to wide fluctuations in response
to: (i) relatively minor changes in supply of, and demand for, oil and gas; (ii)
market uncertainty; and (iii) a variety of additional factors, all of which are
beyond the Company's control. These factors include political conditions in the
Middle East, the foreign supply of oil and gas, the price of imported oil, the
level of consumer and industrial demand, weather, domestic and foreign
government relations, the price and availability of alternative fuels and
overall economic conditions.

UNCERTAINTY OF ESTIMATES OF RESERVES AND FUTURE NET REVENUES

This Prospectus contains estimates of the Company's oil and gas
reserves and the future net revenues from those reserves which have been
prepared by the Company and certain independent petroleum consultants. There are
numerous uncertainties inherent in estimating quantities of proved oil and gas
reserves, including many factors beyond the Company's control. The estimates in
this Prospectus are based on various assumptions, including, for example,
constant oil and gas prices, operating expenses and capital expenditures, and,
therefore, are inherently imprecise indications of future net revenues. Actual
future production, revenues, taxes, operating expenses, development expenditures
and quantities of recoverable oil and gas reserves may vary substantially from
those assumed in the estimates. Any significant variance in these assumptions
could materially affect the estimated quantity and value of reserves set forth
in this Prospectus. In addition, the Company's reserves may be subject to
downward or upward revision based upon production history, results of future
development, prevailing oil and gas prices and other factors. See "Business -
Oil and Gas Reserves."

FINDING AND ACQUIRING ADDITIONAL RESERVES

The Company's future success depends upon its ability to find or
acquire additional oil and gas reserves that are economically recoverable.
Except to the extent the Company conducts successful exploration or development
activities or acquires properties containing proved reserves, the proved
reserves of the Company will generally decline as they are produced. There can
be no assurance that the Company's planned development projects and acquisition
activities will result in significant additional reserves or that the Company
will have success drilling productive wells at economic returns. If prevailing
oil and gas prices were to increase significantly, the Company's finding costs
to add new reserves could increase. The drilling of oil and gas wells involves a
high degrees of risk, especially the risk of dry holes or of wells that are not
sufficiently productive to provide an economic return on the capital expended to
drill the wells. The cost of drilling, completing and operating wells is
uncertain, and drilling or production may be curtailed or delayed as a result of
many factors.

ACQUISITION RISKS

The Company intends to continue acquiring oil and gas properties. It
generally is not feasible to review in detail every individual property involved
in an acquisition. Ordinarily, review efforts are focused on the higher-valued
properties. However, even a detailed review of all properties and records may
not reveal existing or potential problems nor will it permit the Company to
become sufficiently familiar with the properties to assess fully their
deficiencies and capabilities. Inspections are not always performed on every
well, and environmental problems, such as ground water contamination, are not
necessarily observable even when an inspection is undertaken. See "Business -
Strategy-Acquisition Activities."

12
13

MARKETING RISKS

For the year ended December 31, 1995 and for the three month period
ended March 31, 1996 gas revenues comprised over 59% of total oil and gas
revenue on a historical basis and over 63% on a pro forma basis. For the year
ended December 31, 1995, no purchaser accounted for more than 10% of total oil
and gas revenues. For the three months ended March 31, 1996, no one purchaser
accounted for more than 10% of total oil and gas revenues. Management believes
that the loss of any one purchaser would not have a material adverse effect on
the Company. The types of gas contracts under which production is sold vary, but
generally can be grouped into three categories: (i) life-of-well, (ii) long-term
(one year or longer), and (iii) short-term contracts. Short-term contracts are
defined as contracts which may have a primary term of less than one year, but
which are cancelable at either party's discretion in 30 to 120 days.
Approximately 58% of the Company's gas production is currently sold under market
sensitive contracts which do not contain floor price provisions. Nearly 70% of
the Company's gas is produced in Appalachia, which has historically sold at
higher prices. No assurance can be given that such price discrepancy will
continue. See "Business-Gas Transportation and Marketing."

The Company has currently hedged less than 3% of its production through
September 1996. These hedges involve fixed price arrangements and other price
arrangements at a variety of prices, floors and caps. Although these hedging
activities provide the Company some protection against falling prices, these
activities also reduce the benefits to the Company from price increases above
the levels of the hedges. In the future, the Company may increase the percentage
of its production covered by hedging arrangements, however it currently
anticipates that such percentage would not exceed 50%.

OPERATING HAZARDS AND UNINSURED RISKS; PRODUCTION CURTAILMENTS

The oil and gas business involves a variety of operating risks,
including, but not limited to, unexpected formations or pressures,
uncontrollable flows of oil, gas, brine or well fluids into the environment
(including groundwater contamination), blowouts, fires, explosions, pollution
and other risks, any of which could result in personal injuries, loss of life,
damage to properties and substantial losses. Although the Company carries
insurance which it believes is reasonable, it is not fully insured against all
risks. Losses and liabilities arising from uninsured or under-insured events
could have a material adverse effect on the financial condition and operations
of the Company.

From time-to-time, due primarily to contract terms, pipeline
interruptions or weather conditions, the producing wells in which the Company
owns an interest have been subject to production curtailments. The curtailments
range from production being partially restricted to wells being completely
shut-in. The duration of curtailments vary from a few days to several months. In
most cases the Company is provided only limited notice as to when production
will be curtailed and the duration of such curtailments. Currently, a number of
wells located in Appalachia are curtailed under terms of certain gas contracts
due in part to seasonal demand. The Company has been informed that such wells
should be returned to production during the remainder of 1996.

LAWS AND REGULATIONS

The Company's operations are affected by extensive regulation pursuant
to various federal, state and local laws and regulations relating to the
exploration for and development, production, gathering and marketing of oil and
gas. These regulations, among other things, control the rate of oil and gas
production, establish the maximum price at which gas is sold and control the
amount of oil that may be imported. Operations of the Company are also subject
to numerous laws and regulations governing the discharge of materials into the
environment or otherwise relating to environmental protection. The discharge of
oil, gas or other pollutants into the air, soil or water may give rise to
liabilities to the government and third parties and may require the Company to
incur costs to remedy the discharge. Although the Company believes that its
properties and operations substantially comply with all such laws and
regulations, there can be no assurance that new laws or regulations or new
interpretations of existing laws and regulations will not increase substantially
the cost of compliance or otherwise adversely affect the Company's oil and gas
operations and financial condition. See "Business - Regulation."

COMPETITION

The Company encounters substantial competition in acquiring properties,
marketing oil and gas, securing trained personnel and operating its properties.
Many competitors have financial and other resources which substantially exceed
those of the Company. The competitors in acquisitions, development, exploration
and production include major oil companies, numerous independents, individual
proprietors and others. Therefore, competitors may be able to pay more for
desirable leases and to evaluate, bid for and purchase a greater number of
properties or prospects than the financial or personnel resources of the Company
will permit.

DEPENDENCE ON KEY PERSONNEL

The Company depends, and will continue to depend in the foreseeable
future, on the services of its officers and key employees with extensive
experience and expertise in evaluating and analyzing producing oil and gas
properties and drilling prospects, maximizing production from oil and gas
properties and marketing oil and gas production. The ability of the Company to
retain its officers and key employees is important to the continued success and
growth of the Company. The loss of key personnel could have a material adverse
effect on the Company. The Company does not maintain key man life insurance on
any of its officers or key employees. See "Management."

CERTAIN BUSINESS INTERESTS OF CHAIRMAN

Thomas J. Edelman, Chairman of the Company, is also the President of
Snyder Oil Corporation ("SOCO"), another independent oil and gas company. The
Company no longer has existing business relationships with SOCO, but as a result
of Mr. Edelman's position in both companies, conflicts of interests may arise
between the Company and SOCO. Mr. Edelman also serves as Chairman and Chief
Executive Officer of Patina Oil & Gas Corporation ("Patina"), an affiliate of
Snyder Oil Corporation. The Company's acquisitions are typically smaller than
SOCO's and Patina's and are in different geographic regions. The Company has,
and it has been advised that SOCO and Patina also have, board policies that
require Mr. Edelman to give notification of any potential conflicts that may
arise between the Company and SOCO or Patina. There can be no assurance,
however, that the Company and SOCO or Patina will not compete for the same
acquisition or encounter other conflicts of interest. See "Management" and
"Certain Transactions."

CAPITAL AVAILABILITY

The Company's strategy of acquiring and developing oil and gas
properties is dependent upon its ability to obtain financing for such
acquisitions and development projects. The Company expects to utilize its $250
million revolving bank credit agreement, as amended (the "Credit Agreement")
among the Company and several banks (the "Banks") to borrow a portion of the
funds required for any given transaction or project. Any future acquisition or
development project by the Company requiring bank financing in excess of the
amount then available under the Credit Agreement will depend upon the Banks'
evaluation of the properties proposed to be acquired or developed. If funds
under the Credit Agreement are not available to fund acquisition and development
projects, the Company would seek to obtain such financing from the sale of
equity securities or other debt financing. There can be no assurance that any
such other financing would be available on terms acceptable to the Company.
Should sufficient capital not be available, the Company may not be able to
continue to implement its strategy.

The Credit Agreement limits the amounts the Company may borrow to
amounts, determined by the Banks, in their sole discretion, based upon a variety
of factors including the discounted present value of the Company's estimated
future net cash flow from oil and gas production (the "Borrowing Base"). At July
3, 1996 the Borrowing Base was $150 million of which the Company had borrowings
of $118 million outstanding. The weighted average interest rate on July 3, 1996
was 6.75% after giving effect to interest swap arrangements covering $40 million
of the indebtedness outstanding under the Credit Agreement. The Credit Agreement
expires on November 1, 2002. The Company does not currently have any substantial
unpledged properties, and does not anticipate acquiring properties in the
foreseeable future which will not be pledged under the Credit Agreement. If oil
or gas prices decline below their current levels, the availability of funds and
the ability to pay outstanding amounts under the Credit Agreement could be
materially adversely affected.

14
15

THE COMPANY

Lomak is an independent oil and gas company with core areas of
operation in Texas, Oklahoma and Appalachia. The Company has grown through a
combination of acquisition, development and enhancement activities. Since
January 1, 1991, 59 acquisitions have been consummated at a total cost of
approximately $249 million and approximately $24 million has been expended on
development activities. As a result, proved reserves and production have each
grown during this period at a rate of 56% per annum. At December 31, 1995,
proved reserves totaled 298 Bcfe, having a pre-tax present value at constant
prices on that date of $229 million and a reserve life of nearly 12 years. The
Company as of December 31, 1995, operated 6,200 properties which accounted for
more than 93% of its reserves. In addition, the Company owns and operates
approximately 1,900 miles of gas gathering systems in proximity to its principal
gas properties. In 1996, the Company expects to allocate a limited portion of
its budget to selected exploratory activities in its core operating areas.

The Company focuses primarily on smaller properties, where
consolidation is likely, and those areas that it believes to be less competitive
and to have a lower risk profile and longer reserve life than many alternate
opportunities. Management believes smaller producing properties can be acquired
at a lower relative cost than larger properties and that its focus on these
properties, in part, has accounted for its ability to acquire approximately 396
Bcfe of proved reserves since 1991 at an average cost of $.59 per Mcfe, well
below the independent producer industry average of $.69, as reported in Arthur
Andersen LLP's Oil and Gas Reserve Disclosure Survey.

At December 31, 1995, the Company's pro forma proved reserves totaled
404 Bcfe, having a pre-tax present value at constant prices of $299 million.
Over 75% of the pro forma proved reserves were natural gas. The Company's
properties are located onshore primarily in the Mid-Continent region and
Appalachian Basin and include 7,088 gross (5,331 net) productive wells on a pro
forma basis. The Company operates over 6,700 wells on a pro forma basis. In
addition, the Company owns and operates approximately 1,900 miles of gas
gathering systems in proximity to its principal gas properties. The Company also
provides oil field services, including brine disposal and various well services,
for its own properties and third parties.

For a description of certain business relationships between the
Company, SOCO and Patina and Mr. Edelman, Chairman of the Company, and various
conflicts of interest which may arise between them, see "Risk Factors-Certain
Business Interests of Chairman," "Management" and "Certain Transactions."

Incorporated in Delaware in 1980, the Company is the corporate
successor to the business of the corporation incorporated under the same name in
Ohio in 1976. The Company maintains its corporate headquarters at 500
Throckmorton Street, Fort Worth, Texas 76102, and its telephone number is
(817)870-2601.

15
16

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock is listed on Nasdaq under the symbol "LOMK." At June
28, 1996, 14,696,114 shares were held by 4,461 stockholders of record. During
1995, trading volume on Nasdaq averaged approximately 82,200 shares per day.

Common Average
Stock Daily
High Low Dividends Volume
------------- ------------- ------------- --------------
(shares)
1994
----

First Quarter............................... $8.625 $7.125 $ - 52,100
Second Quarter.............................. 8.250 6.750 - 28,800
Third Quarter............................... 9.250 8.000 - 27,500
Fourth Quarter.............................. 8.250 6.750 - 19,900

1995
----
First Quarter............................... $7.375 $5.500 $ - 57,800
Second Quarter.............................. 8.188 7.250 - 111,500
Third Quarter............................... 9.250 7.250 - 80,700
Fourth Quarter.............................. 9.750 7.500 .01 92,000

1996
----
First Quarter............................... $12.125 $9.500 $ .01 133,800
Second Quarter.............................. 14.750 11.625 .01 85,800
Third Quarter (through July 12, 1996)....... 15.000 13.375 - 100,100

Quarterly dividends of $.01 per share were initiated on the Common Stock in December 1995. The Board of Directors
approved a dividend of $.01 per share to holders of its Common Stock to be paid on March 29, 1996. The $2.03 Convertible
Preferred Stock receives cumulative quarterly dividends at the annual rate of $2.03 per share. If there is any arrearage
in dividends on Preferred Stock, the Company may not pay dividends on Common Stock. Presently, the Company is not in
arrears in the payment of preferred dividends. Additionally, under the terms of the Credit Agreement, the Company is
restricted from paying preferred dividends unless various covenants relating to net worth, working capital maintenance
and financial ratio requirements have been met.

The Company currently retains substantially all of its earnings to support the development of its business. Any
future determination as to the payment of dividends will be at the discretion of the Board of Directors of the Company,
and will depend on the Company's financial condition, results of operations and capital requirements, and such other
factors as the Board of Directors deems relevant. In addition, the Company's bank credit facility limits the amount of
cash dividends that can be paid in one year to 75% of the Company's net income, plus the cumulative net proceeds from all
equity offerings completed after January 1, 1996.

16
17

CAPITALIZATION

The following table sets forth at March 31, 1996 the actual capitalization
of the Company and gives pro forma effect to the conversion of the Company's
7 1/2% Preferred Stock which occurred in May 1996. This table should be read in
conjunction with the Consolidated Financial Statements and Pro Forma Combined
Financial Statements included herein.

MARCH 31, 1996
------------------------------
ACTUAL PRO FORMA
---------- -----------
(IN THOUSANDS)

Current portion of long-term debt...................................................... $ 26 $ 26
========== ===========
Long-term debt:
Revolving credit facility............................................................. $ 95,090 $ 130,990

Stockholders' equity:
Preferred Stock, $1 par value, 2,000,000 shares authorized:
7 1/2% Convertible Exchangeable Preferred Stock, 200,000 shares outstanding
($5 million liquidation preference).............................................. 200 -
$2.03 Convertible Exchangeable Preferred Stock; 1,150,000 shares outstanding
($28.8 million liquidation preference)........................................... 1,150 1,150
Common Stock, $.01 par value, 20,000,000 shares authorized: 13,402,246 outstanding(1). 134 140
Capital in excess of par value........................................................ 101,881 102,075
Retained earnings (deficit)........................................................... (2,219) (2,219)
---------- -----------
Total stockholders' equity.................................................... 101,146 101,146
---------- -----------
Total capitalization........................................ $ 196,236 $ 232,136
========== ===========

(1) At March 31, 1996, there were 13,402,246 shares of Common Stock issued and
outstanding. The number of shares of Common Stock outstanding excludes
1,243,149 shares which were reserved for issuance upon the exercise of
outstanding options and warrants and 3,603,261 shares issuable upon
conversion of preferred stock. See "Description of Capital Stock."

USE OF PROCEEDS

This Prospectus relates to Common Stock which may be offered and issued
by the Company from time to time in the acquisition of Interests. Other than the
Interests acquired and $300,000 received upon the exercise of 40,000 warrants to
purchase Common Stock at a price of $7.50 per share, if the exercise occurs,
there will be no proceeds to the Company from these offerings.

17
18

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table presents selected historical financial information
covering the five years ended December 31, 1995, the three months ended March
31, 1995 and 1996 (unaudited), and pro forma financial information for the year
ended December 31, 1995 and three months ended March 31, 1996. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations." The
historical data should be read in conjunction with the historical Consolidated
Financial Statements included herein The pro forma information should be read in
conjunction with the Pro Forma Combined Financial Statements included herein.
Neither the historical nor the pro forma results are necessarily indicative of
future results.

THREE MONTHS ENDED
MARCH 31,
YEAR ENDED DECEMBER 31, (UNAUDITED)
---------------------------------------------------------------- -------------------------------
PRO FORMA PRO FORMA
1991 1992 1993 1994 1995 1995 1995 1996 1996
--------- --------- --------- ---------- --------- ------------ ----------- --------- ----------

INCOME STATEMENT DATA:
Revenues
Oil and gas sales........... $5,384 $7,703 $11,132 $24,461 $37,417 $54,966 $7,430 $16,088 $17,791
Field services.............. 3,966 5,283 6,966 7,667 10,097 10,097 2,464 3,300 3,300
Gas transportation and
marketing................. 279 332 559 2,195 3,284 3,284 786 1,028 1,028
Interest and other.......... 939 577 418 471 1,317 1,317 223 97 97
--------- --------- --------- --------- --------- ------------ ----------- --------- ----------
Total revenues 10,568 13,896 19,075 34,794 52,115 69,664 10,903 20,513 22,216
--------- --------- --------- --------- --------- ------------ ----------- --------- ----------
Expenses
Direct operating............ 2,165 3,019 4,438 10,019 14,930 20,985 3,150 5,758 6,320
Field services.............. 2,579 3,951 5,712 5,778 6,469 6,469 1,593 2,529 2,529
Gas transportation and
marketing................. - 7 13 490 849 849 199 290 290
General and administrative 2,208 1,915 2,049 2,478 2,736 2,874 758 918 956
Exploration................. 5 49 86 359 512 512 130 180 180
Interest.................... 672 952 1,120 2,807 5,584 7,921 1,156 1,554 2,136
Depletion, depreciation and
amortization............. 2,387 3,124 4,347 10,105 14,863 21,643 3,000 5,278 5,879
--------- --------- --------- ---------- --------- ------------ ----------- --------- ----------
Total expenses 10,016 13,017 17,765 32,036 45,943 61,253 9,991 16,507 18,290
--------- --------- --------- ---------- --------- ------------ ----------- --------- ----------
Income before taxes........... 552 878 1,310 2,758 6,172 8,411 912 4,006 3,926
Income taxes.................. (125) (192) 81 (139) (1,782) (2,145) (117) (1,403) (1,374)
--------- --------- --------- ---------- --------- ------------ ----------- --------- ----------
Net income $427 $686 $1,391 $2,619 $4,390 $6,266 $795 $2,603 $2,552
========= ========= ========= ========== ========= ============ =========== ========= ==========
Net income applicable to
common shares.............. $57 $392 $1,062 $2,244 $3,659 $4,466 $701 $1,926 $1,875
========= ========= ========= ========== ========= ============ =========== ========= ==========
Net income per share.......... $0.01 $0.08 $0.18 $0.25 $0.31 $0.36 $0.07 $0.14 $0.14
========= ========= ========= ========== ========= ============ =========== ========= ==========
Dividend per share $0.00 $0.00 $0.00 $0.00 $0.01 $0.01 $0.00 $0.01 $0.01
========= ========= ========= ========== ========= ============ =========== ========= ==========
Average shares outstanding 4,154 4,682 5,853 9,051 11,841 12,251 10,555 13,691 13,691

CASH FLOW DATA:

Net income.................... $427 $686 $1,391 $2,619 $4,390 $4,466 $795 $2,603 $2,552
Depletion, depreciation and
amortization................ 2,387 3,124 4,347 10,105 14,863 21,643 3,000 5,278 5,879
Deferred income taxes......... - - (150) 118 1,696 1,850 101 1,323 1,296
--------- --------- --------- ---------- --------- ------------ ----------- --------- ----------
Subtotal............. 2,814 3,810 5,588 12,842 20,949 27,959 3,896 9,204 9,727
Other non-cash items.......... (553) (278) (321) (471) (1,564) N/A (127) (2,892) N/A
Changes in working capital (1,071) 1,636 (962) (1,130) (2,824) N/A (2,079) (72) N/A
--------- --------- --------- ---------- --------- ----------- ---------
Net cash provided from
operating activities.......... $1,190 $5,168 $4,305 $11,241 $16,561 N/A $1,690 $6,240 N/A
========= ========= ========= ========== ========= =========== =========

BALANCE SHEET DATA:
Working capital............... $72 $167 $1,350 $1,002 $4,439 $4,503 $4,253 $4,699
Oil and gas properties, net 16,261 18,271 55,310 112,964 176,702 123,239 191,492 226,946
Total assets.................. 24,332 28,328 76,333 141,768 214,664 151,801 232,207 268,212
Long-term debt................ 11,688 12,679 30,689 61,885 83,035 66,245 95,090 130,990
Stockholders' equity.......... 7,962 9,504 32,263 43,248 99,243 57,701 101,146 101,146

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto and the Selected
Historical and Pro Forma Financial Data and Pro Forma Combined Financial
Statements (unaudited) included elsewhere herein.

FACTORS AFFECTING FINANCIAL CONDITION AND LIQUIDITY

GENERAL

During the three months ended March 31, 1996, the Company reached
$232.2 million of assets and increased stockholders' equity to $101.1 million.
The growth was achieved primarily through acquisitions and development. Net
income for the first quarter of 1996 increased 227% to $2.6 million versus
$795,000 in the prior year first quarter. The increases were primarily due to
higher production volumes attributable to acquisitions and development and
higher product prices. Working capital at March 31, 1996 was $4.3 million.
During the quarter, long-term debt rose from $83.0 million to $95.1 million.

At March 31, 1996, capitalization totaled $196.2 million, of which 52%
was represented by stockholders' equity and 48% by long-term debt. Essentially
all of the long-term debt is comprised of borrowings under the Credit Agreement.
The Credit Agreement provides for quarterly payments of interest with principal
payments beginning February 1999. In April 1996, the Company completed a $6.9
million private placement of Common Stock. The proceeds were used to fund a
portion of a $35.9 million acquisition which was completed during April. The
remaining portion of the acquisition was funded by borrowings under the Credit
Agreement. In April and May 1996, the Company exercised its option to convert
the 7-1/2% Preferred Stock into approximately 577,000 shares of Common Stock.

For the three months ended March 31, 1996 operating cash flow totaled
$9.4 million, a 133% increase over the prior year period. Cash flow plus bank
borrowings funded $20.2 million of acquisitions and development expenditures.
Approximately $7 million of the bank borrowings were repaid in April 1996 with
the proceeds received from the private placement of Common Stock. The Company
expects to continue to fund its activities from internally generated funds,
borrowings under the Credit Agreement and the issuance of debt and equity
securities. During the next twelve months, non-discretionary capital
requirements include $2.3 million of preferred dividends and interest under the
Credit Agreement. Additionally, the Company expects to continue its acquisition
and development activities in 1996. Although these expenditures are principally
discretionary, the Company estimates that it will spend approximately $15
million on development activities in 1996, of which $2 million was incurred in
the first three months. Cash flow is expected to be more than sufficient to fund
development expenditures with the remainder available to fund acquisitions.

All oil and gas properties are subject to production declines over
time. Through acquisitions, the Company has increased its reserves in each of
the last five years. It is anticipated that the Company will continue to build
reserves primarily through acquisitions and development over the next several
years. The profitability of production and, to a lesser extent, other areas of
the Company's business are influenced by energy prices.

FUTURE CAPITAL SPENDING

During 1995, the Company acquired oil and gas properties, gas
transportation and field service assets for $71.1 million. Additionally, the
Company incurred capital expenditures for development and exploration activities
of $10.2 million. In total, $79.4 million of capital expenditures were incurred
in 1995, versus $69.2 million in 1994. The Company currently estimates that
capital expenditures for acquisition and development activities will range from
$50 million to $75 million in 1996. All of these expenditures are discretionary
and could increase or decrease based upon the level of activity and the
availability of capital.

The only material requirements for capital during the next twelve
months are $2.3 million of preferred stock dividends, interest payments under
the Credit Agreement and $53,000 of debt payments. Working capital and cash flow
from operations will be more than sufficient to fund these expenditures. Excess
funds will be used to help fund acquisitions and development activities.

In March 1996, the Company's Board of Directors approved resolutions
authorizing the Company to repurchase shares of its Common Stock from odd-lot
holders. The Company will acquire any and all shares from stockholders owning 99
or fewer shares for cash at market prices. Additionally, the Board of Directors
approved a quarterly dividend of $.01 per share to holders of its Common Stock
to be paid on March 29, 1996.

CREDIT AGREEMENT

The Credit Agreement provides for a borrowing base which is subject to
semi-annual redeterminations. In April 1996, the borrowing base on the credit
facility was increased to $150 million. The facility bears interest at prime
rate or LIBOR plus 0.75% to 1.25% depending upon the percentage of the borrowing
base drawn. Interest is payable quarterly and the loan is payable in sixteen
quarterly installments beginning February 1, 1999. A commitment fee of 3/8% of
the undrawn balance is payable quarterly. It is the Company's policy to extend
the term period of the Credit Agreement annually. The weighted average interest
rate on these borrowings were 6.3%, 7.3% and 6.5% for the years ended December
31, 1994 and 1995 and for the three months ended March 31, 1996, respectively.
The weighted average interest rate gives effect to interest rate swap
arrangements which have the effect of fixing the interest rate on $40 million of
the credit facility at a rate of 6.4%. The existing interest rate swap
arrangements will remain in effect through no earlier than July 1997 and no
later than October 1999. The Company's other debt is comprised of secured
equipment financings.

The debt agreements contain various covenants relating to net worth,
working capital maintenance and financial ratio requirements. Interest paid
during the years ended December 31, 1993, 1994 and 1995 and the three months
ended March 31, 1996 totaled $1.2 million, $2.8 million, $4.9 million and $0.7
million, respectively.

INFLATION AND CHANGES IN PRICES

The Company's revenues and the value of its oil and gas properties have
been and will be affected by changes in oil and gas prices. The Company's
ability to maintain current borrowing capacity and to obtain additional capital
on attractive terms is also substantially dependent on oil and gas prices. Oil
and gas prices are subject to significant seasonal and other fluctuations that
are beyond the Company's ability to control or predict. During 1995, the Company
received an average of $16.57 per barrel of oil and $1.79 per Mcf of gas. During
the three months ended March 31, 1996, the Company received and average of
$17.43 per barrel of oil and $2.32 per Mcf of gas. Although certain of the
Company's costs and expenses are affected by the level of inflation, inflation
did not have a significant effect in 1995. Should conditions in the industry
improve, inflationary cost pressures may resume.

20
21

RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996
TO THREE MONTHS ENDED MARCH 31, 1995(UNAUDITED)

The Company reported net income for the three months ended March 31, 1996
of $2.6 million a 227% increase over first quarter 1995. The increase is the
result of higher production volumes, higher product prices and lower unit costs.
During the quarter, oil and gas production volumes increased 84% to 6.5 Bcfe, an
average of 72,000 Mcfe per day. Production revenues also benefited from an 18%
increase in the average price received per Mcfe of production from $2.09 to
$2.46. The average oil price increased from $16.36 to $17.43 per barrel while
average gas prices increased 30% from $1.78 to $2.32 per Mcf. As a result of a
larger base of producing properties, operating expenses increased 83% to $3.2
million. However, the operating cost per Mcfe produced decreased slightly from
$.89 in 1995 to $.88 in 1996.

Gas transportation and marketing revenues rose 31% to $1.0 million
versus $786,000 in the first quarter of 1995. The higher revenues were due
primarily to expanded marketing activities and increased gas transportation
revenues attributable to its larger pipeline network. The increase in gas
transportation and marketing expenses of 46% reflects higher administration
costs associated with the growth in gas marketing.

Field services revenues increased 34% in the first quarter of 1996 to
$3.3 million. The higher revenues were due primarily to a larger base of
operated properties. As a result of the increased revenues field services
expenses increased 58% in the first quarter of 1996 versus 1995. Exploration
expense increased 38% due to the Company's increased involvement in acreage
acquisition, seismic and exploratory drilling.

General and administrative expenses increased 21% from $758,000 in 1995
to $918,000 in 1996. On a per Mcfe of production basis, general and
administrative expenses decreased from $.21 in the first quarter of 1995 to $.14
for the same period in 1996. Interest and other income decreased 57% primarily
due to a lower level of property sales. Interest expense increased 34% to $1.6
million as a result of the higher average outstanding debt balance during the
period due to the financing of acquisitions.

Depletion, depreciation and amortization expense rose 76% as a result
of increased production volumes. The impact of higher volumes was offset by a
reduction in the depletion rate to $.72 per Mcfe in the first quarter of 1996.

COMPARISON OF 1995 TO 1994

The Company reported net income for the year ended December 31, 1995 of
$4.4 million, a 68% increase over 1994. This increase is the result of higher
production volumes attributable to acquisition and development activities.
During the year, oil and gas production volumes increased 66% to 17.9 Bcfe, an
average of 49,172 Mcfe per day. The increased revenues recognized from
production volumes were partially offset by an 8% decrease in the average price
received per Mcfe of production to $2.08. The average oil price increased 9% to
$16.57 per barrel while average gas prices dropped 15% to $1.79 per Mcf. As a
result of the Company's larger base of producing properties and production, oil
and gas production expenses increased 49% to $14.9 million in 1995 versus $10.0
million in 1994. However, the average operating cost per Mcfe produced decreased
11% from $.93 in 1994 to $.83 in 1995.

Gas transportation and marketing revenues increased 50% to $3.3 million
versus $2.2 million in 1994. Coupled with this increase in gas transportation
and marketing revenues was a 73% increase in associated expenses for the year.
These increases were due primarily to the acquisition of several pipeline
systems, as well as the expansion of the gas marketing efforts.

Field services revenues increased 32% in 1995 to $10.1 million, despite
the September 1994 sale of virtually all well servicing and brine disposal
assets in Ohio. The decrease in activities due to this sale was more than offset
by an increase in well servicing and brine disposal activities in Oklahoma and
well operations on acquired properties. Field services expenses increased 12% in
1995 to $6.5 million versus $5.8 million. The increase is attributed to the
Oklahoma well servicing and the cost of operating a larger base of properties.
The increase in well operating costs was offset to a great extent by the
disposal in September 1994 of the Company's lower margin well servicing and
brine hauling and disposal businesses.

Exploration expense increased 43% to $512,000 due to the Company's
increased involvement in exploration projects. These costs include delay
rentals, seismic and exploratory drilling activities.

General and administrative expenses increased 10% from $2.5 million in
1994 to $2.7 million in 1995. As a percentage of revenues, general and
administrative expenses were 5% in 1995 as compared to 7% in 1994. This
decreasing trend reflects the spreading of administrative costs over a growing
asset base.

Interest and other income rose 180% primarily due to higher sales of
non-strategic properties. Interest expense increased 99% to $5.6 million as
compared to $2.8 million in 1994. This was primarily as a result of the higher
average outstanding debt balance during the year due to the financing of capital
expenditures. The average outstanding balances on the bank credit facility were
$42.0 million and $73.3 million for 1994 and 1995, respectively. The weighted
average interest rate on these borrowings were 6.3% and 7.3% for the years ended
December 31, 1994 and 1995, respectively.

Depletion, depreciation and amortization increased 47% compared to 1994
as a result of increased production volumes during the year. The increased
depletion of oil and gas properties was partially offset by the reduction of
depreciation of field services assets due to the 1994 sale of field service
assets. The Company-wide depletion, depreciation and amortization rate for 1995
was $.83 per Mcfe versus $.93 in 1994.

COMPARISON OF 1994 TO 1993

The Company reported net income for the year ended December 31, 1994 of
$2.6 million, an 88% increase over 1993 net income. This increase can be
attributed primarily to the realization of income from properties acquired in
the fourth quarter of 1993 and in 1994, as well as the success of the 1994
drilling program.

During the year, oil and gas production volumes increased 141% to 10.8
MMcfe, an average of 29,680 Mcfe per day. The increased revenues recognized from
production volumes were partially offset by a 9% decrease in the average price
received per Mcfe of production to $2.26. The average oil price decreased 5% to
$15.23 per barrel and average gas prices dropped 9% to $2.10 per Mcf. As a
result of the Company's larger base of producing properties and production, oil
and gas production expenses increased 126% to $10.0 million in 1994 versus $4.4
million in 1993. However, the average operating cost per Mcfe produced decreased
5% from $0.98 in 1993 to $0.93 in 1994.

Gas transportation and marketing revenues rose almost four fold to $2.2
million versus $0.6 million in 1993. Coupled with this increase in gas
transportation and marketing revenues was an increase in associated expenses for
the year. These increases were due primarily to the acquisition of several
pipeline systems in late 1993, as well as the expansion of the gas marketing
efforts.

Field services revenues increased in 1994, despite the September 1994
sale of virtually all well servicing and brine hauling and disposal assets in
Ohio. The decrease was offset by a marked increase in well operating revenues
recognized on acquired properties. Field services expenses increased marginally
in 1994 to $5.8 million versus $5.7 million. The slight increase can be
attributed to the cost of operating a growing base of properties. The increase
in well operating costs was offset to a great extent by the disposal in
September 1994 of the Company's low-margin well servicing and brine hauling and
disposal businesses.

Exploration expense increase four-fold due to the Company's increased
involvement in drilling projects. The results of these costs can be seen in the
increase in production due partially to its 1994 drilling program.

General and administrative expenses increased 21% from $2.0 million in
1993 to $2.5 million in 1994. As a percentage of revenues, general and
administrative expenses were 7% in 1994 as compared to 11% in 1993. This
decreasing trend reflects the spreading of administrative costs over a growing
asset base.

Interest and other income rose 13% primarily due to a higher level of
non-strategic property sales. Interest expense increased 151% to $2.8 million as
compared to $1.1 million in 1993. This was as a result of the higher average
outstanding debt balance during the year due to the financing of acquisitions
and rising interest rates.

Depletion, depreciation and amortization increased 132% compared to
1993 as a result of increased production volumes during the year. The increased
depletion of oil and gas properties was partially offset by the reduction of
depreciation of field services assets due to the September 1994 sale of field
service assets.

ACCOUNTING STANDARDS

In March 1995, the Financial Standards Board (FASB) issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." This standard requires the review of long-lived
assets for impairment. Although the Company in the past has routinely reviewed
its oil and gas assets for impairment, the new accounting rules may require a
different grouping which may affect the amount of impairment, if any. SFAS No.
121 is required to be adopted for financial statements with fiscal years
beginning after December 15, 1995 and allows the cumulative effect of the
accounting change to be reported in net income in the year of adoption. The
Company is currently reviewing the accounting standard and has not yet
determined the effect, if any, on its consolidated financial position or results
of operations.

In October 1995, FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." This standard requires an audited pro forma footnote disclosure
of what net income and earnings per share would have been for the Company based
upon valuing employee options and other stock based compensation, at their
estimated fair value using an option pricing model. SFAS No. 123 is required to
be adopted for financial statements with fiscal years beginning after December
15, 1995. The Company is currently reviewing the accounting standard and has not
yet determined the effect, if any, on its financial statements.

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24

BUSINESS
GENERAL

The Company is an independent oil and gas company engaged in the
acquisition, development, exploration and enhancement of oil and gas properties
in the United States. Lomak's core areas of operation are located in Texas,
Oklahoma and Appalachia. The Company has grown through a combination of
acquisition, development, exploration and enhancement activities. Since January
1, 1991, 59 acquisitions have been consummated at a total cost of approximately
$249 million and $24 million has been expended on development and exploration
activities. As a result, proved reserves and production have each grown during
this period at a rate of 56% per annum. At December 31, 1995, proved reserves
totaled 298 Bcfe, having a pre-tax present value at constant prices of $229
million and a reserve life of nearly 12 years.

Lomak's acquisition effort is focused on properties with prices of less
than $30 million within its core areas of operation. Management believes these
purchases are less competitive than those involving larger property interests.
To the extent purchases continue to be made primarily within existing core
areas, efficiencies in operations, drilling, gas marketing and administration
should be realized. In 1993, Lomak initiated a program to exploit its growing
inventory of development projects. In the future, Lomak expects its growth to be
driven principally by a combination of acquisitions and development and, to a
lesser extent, exploration.

At December 31, 1995, Lomak held interests in 6,596 gross (4,965 net)
productive oil and gas wells. The Company currently operates over 6,200 wells
which account for more than 93% of its developed reserves. In addition, the
Company owns and operates approximately 1,900 miles of gas gathering systems in
proximity to its principal gas properties. The Company also provides oil field
services, including brine disposal and various well services primarily for
certain of its own properties. The operations of the Company are considered to
fall within a single industry segment; the exploration for, development and
production of crude oil and natural gas.

STRATEGY

The Company's objective is to continue to increase its asset base, cash
flow and earnings through a balanced strategy of acquisitions, development,
exploration and enhancement activities in core operating areas. In each core
area, the Company establishes separate acquisition, engineering, operating,
geological and other technical expertise. The Company currently has core
operating areas in Texas, Oklahoma and Appalachia. Through its strategy, the
Company does not depend solely on any one region or activity to grow its asset
base. In addition, by operating in three core areas, the Company has expanded
its acquisition, development and exploration opportunities.

Acquisitions. Since 1991, 59 acquisitions have been completed for a
total consideration of $249 million. Approximately 396 Bcfe of proved reserves
have been acquired at an average cost of $.59 per Mcfe. The Company's
acquisition strategy is based on: (i) Size: targeting smaller, less competitive
transactions having a cost below $30 million; (ii) Locale: focusing in areas
containing many small oil and gas operators and where larger companies are no
longer active; (iii) Efficiency: targeting acquisitions in which operating and
cost efficiencies can be obtained; (iv) Reserve Potential: pursuing properties
with the potential for reserve increases through recompletions and drilling; (v)
Incremental Purchases: seeking acquisitions where opportunities for purchasing
additional interests in the same or adjoining properties exist; and (vi)
Complexity: pursuing more complex but less competitive corporate or partnership
acquisitions.

Development. The Company's development activities include recompletions
of existing wells, infield and step-out drilling and installation of secondary
recovery projects. Development projects are generated within core operating
areas where the Company has significant operational and technical experience. At
December 31, 1995, over 750 proven development projects were in inventory. These
projects are located in eight different fields, vary between oil and gas, and
are balanced between low and medium risk. Approximately 100 of these projects
are expected to be initiated in 1996 at a total cost of approximately $15
million. Based on the number of projects currently in inventory, development
expenditures are currently projected to approximate $45 million over the three
year period 1996 through 1998.

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25

Exploration. To date, the Company has concentrated on its acquisition
and development activities while building its asset base and cash flow. In the
future, exploration activities are expected to be expanded within the Company's
core operating areas. These activities are expected to be an extension of the
Company's development activities and will be initiated by its in-house technical
staff.

Enhancements. The Company's enhancement activities include all
activities other than acquisitions, development and exploration which maximize
the value of its assets. Enhancements include: reducing overhead, operating and
development costs; concentrating operations to increase efficiency; the rapid
disposal of non-strategic properties; expanding marketing options; and applying
new technology to exploit additional reserves. Enhancements increase margins and
help maintain profitability during downward phases of energy price cycles.

Acquisition Activities

Since 1991, the Company has completed 59 acquisitions for $249 million
of consideration. During 1995, $71.1 million of purchases were completed. During
the four months ended April 30, 1996, $55 million of purchases were completed.
The Company's acquisition strategy is to concentrate on smaller transactions
that offer higher expected returns. The Company believes that it can continue to
implement its acquisition strategy based on the following:

SIZE: The Company believes that smaller transactions (less than $30
million in cost) provide the opportunity for higher returns due to the
limited number of buyers that have the interest, financial capabilities
and the operational efficiencies necessary to consummate such
transactions. Smaller companies generally do not have sufficient
capital or the requisite expertise to engage in such transactions while
the larger companies are focusing on other areas, such as overseas
operations, or larger transactions. Additionally, because of the
continuing restructuring of the domestic oil and gas industry, many
small oil and gas entities are for sale and many larger companies are
selling their smaller or non-strategic properties. As the Company
grows, it may review acquisitions in excess of $30 million, however,
the significant portion of its acquisitions are still expected to be
$30 million or below.

LOCALE: Focusing on areas containing many small, less capitalized
operators. These typically are areas in which many of the major and
larger independent companies are no longer active and where, in some
cases, they are divesting their remaining assets. The potential for
reserve increases in these areas exists through the application of new
operating and technical advances.

EFFCIENCY: Targeting acquisitions in which operating and cost
efficiencies can be obtained. The Company concentrates on acquiring oil
and gas assets in areas in which it already operates and seeks to
subsequently merge into its existing infrastructure the overhead
functions of companies, partnerships and direct property interests it
acquires. Not only does the increased efficiency result in increased
profitability, but it also enables the Company to be an aggressive
buyer while still generating an attractive return.

RESERVE POTENTIAL: Pursuing properties with the potential for reserve
increases through workovers, recompletions, drilling and secondary
recovery operations.

INCREMENTAL PURCHASES: Seeking acquisitions where opportunities for
purchasing incremental interests in the same or adjoining properties
exist. Properties in which the Company currently owns an interest
contain over $100 million of estimated value attributable to the
reserves for interests held by third parties. The purchase of
incremental interests results in only minor increases in overhead cost.

COMPLEXITY: A number of companies and partnerships which own oil and
gas assets have been acquired at attractive prices. Due to the added
complexity involved in acquiring and integrating these entities and
their assets, many buyers do not have the expertise or desire to
compete for such acquisitions.

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26

The following table sets forth information pertaining to acquisitions
completed during the past five years and four months.

Number of Purchase Price MMcfe Acquired Cost per Mcfe
Period Transactions (1) Acquired (2)
- ------------------------------- --------------- ---------------- ---------------- ---------------
(In thousands)

1991 9 $11,200 14,600 $0.75
1992 7 6,900 12,510 0.41
1993 12 40,500 64,550 0.59
1994 17 63,400 92,850 0.67
1995 9 71,100 103,850 0.61
1996 (through April 30) 5 55,500 107,500 0.53
--------------- ---------------- ---------------- ---------------
Total 59 $248,600 395,860 $0.59
=============== ================ ================ ===============

(1) Includes purchase price for proved reserves as well as other acquired
assets, including gas gathering lines, undeveloped leasehold and field
service assets.
(2) Includes purchase price for proved reserves only.

Development and Exploration Activities

Development activities include recompletions of existing wells, the
drilling of infield and step-out wells and secondary recovery projects.
Approximately $3.7, $9.5 and $11.1 million was expended on these activities
during 1993, 1994 and 1995, respectively. The Company estimates that it will
spend up to $15 million on development activities in 1996. Based on over 750
proven development projects currently in inventory, capital expenditures are
currently estimated to be approximately $45 million over the three year period
1996 through 1998.

The Company's development strategy is to own as large an interest as
possible in more established, lower risk development projects. Conversely, in
development activities that are less established and therefore deemed to be of
higher risk, the Company generally seeks to participate for no more than a 50%
interest. As more confidence is gained in regard to the higher risk development
activities, the Company may increase its ownership percentage.

Texas. At December 31, 1995, Texas accounted for 182 proved development
projects. The majority of these projects include recompletions and infield
drilling locations in the Big Lake Area of west Texas and the Laura La Velle
Field of east Texas. The production from these two fields is predominantly oil.
The Company has performed 29 recompletions and drilled 40 wells in these two
fields. As a result of development and additional acquisitions, gross production
from the two fields has increased from 500 Boe per day to over 1,850 Boe per
day. In 1996, the Company expects to recomplete 12 wells and drill 18 new wells
in the two fields at a cost of approximately $2.5 million.

Oklahoma. Essentially all of the 207 Oklahoma proved development
projects are in the Okeene Field located in the northwestern portion of the
Anadarko Basin. These projects include 133 recompletions and 74 drilling
locations. The Company's primary producing area is situated in a four township
area that straddles the Blaine-Major County line, with over 250 Company operated
wells. The majority of the reserves are gas and are produced from six geologic
horizons at depths ranging from 7,000 to 9,000 feet. The Company acquired its
interests in the field during the fourth quarter of 1994. In 1996, the Company
estimates it will undertake 24 recompletions and drill 9 new wells for
approximately $4.0 million. An extensive geologic study of the area has been
initiated to further identify additional development opportunities.

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27

Appalachia. In Ohio, Pennsylvania and West Virginia 392 proved
development projects have been identified in the shallow Clinton, Medina and
Upper Devonian Sandstone formations. These projects are located on 448,000 gross
(341,000 net) acres under lease and range in depth from 2,000 to 6,000 feet. The
reserves are characterized by initial flush production, followed by extremely
gradual decline rates resulting in a projected life of over twenty years. During
1996 the Company estimates that it will recomplete 10 wells and drill 30 new
wells at a cost of approximately $4.0 million. The Company currently has a
sufficient inventory of proved infield drilling locations to drill over 75 wells
per year over the next five years.

In addition to the shallow formations discussed above, the Appalachian
Basin has less developed formations including the Rose Run-Beekmantown and
Trempealeau which range in depths from 4,000 to 8,000 feet. The geological
boundaries of these formations lie approximately 2,500 feet below the shallower
Clinton and Medina Sandstone formations. While the industry has drilled over
100,000 Clinton and Medina Sandstone wells, fewer than 1,700 wells have been
drilled to the Rose Run-Beekmantown and 5,000 wells to the Trempealeau. The
industry's initial results were poor because the wells were based strictly upon
regional geology and limited seismic data was utilized. However, more recent
activities using modern seismic technologies have significantly improved the
returns from these deeper zones. Since 1993, the Company has participated in 29
deeper wells with an average working interest of 11%, of which, 16 were
productive and 13 were dry. Currently, the Company owns leases covering 318,000
gross (237,000 net) acres in the deeper "Rose Run Trend." The Company's 1996
budget allocates approximately $2 million to acquire acreage and seismic and to
drill wells in this area.

Enhancement Activities

The Company defines enhancements as those activities, other than
acquisitions or drilling, which maximize the value of its asset base.
Enhancements include: reducing overhead, operating and development costs on a
per Mcfe basis; concentrating operations to increase efficiency; disposing
non-strategic properties rapidly; expanding marketing options; and applying new
technology to exploit additional reserves. Enhancements create higher margins
and help maintain profitability during the downward phase of energy price
cycles. Despite low oil and gas prices in recent years, the Company posted
increased cash flow and profits, partly due to enhancements. Primarily as a
result of its enhancement activities during the past five years the Company has:
(i) decreased overhead costs per Mcfe by 89%; (ii) cut operating costs per Mcfe
by 30%; (iii) reduced development costs per Mcfe by 31%; (iv) now operates
properties representing more than 93% of its reserves; (v) sold over 1,000
non-strategic properties; (vi) expanded gas marketing to nearly 90 MMcf per day
through 1,900 miles of Company-owned gas gathering systems; and (vii) improved
seismic and completion techniques by applying new technology.

PRODUCTION

Production revenue is generated through the sale of oil and gas from
properties held directly and through partnerships and joint ventures. Additional
revenue is received from royalties. Oil and gas production is sold to a limited
number of purchasers. Through March 31, 1996, no one purchaser accounted for
more than 10% of total oil and gas revenues. Management believes that the loss
of any one purchaser would not have a material adverse effect on the Company's
business. Proximity to local markets, availability of competitive fuels and
overall supply and demand are factors affecting the ability to market
production. There has been a worldwide surplus of oil and gas for more than a
decade which has weakened oil prices and particularly recently, depressed the
price of natural gas. While the Company anticipates an upward trend in energy
prices, factors outside its control such as political developments in the Middle
East, overall energy supply, weather conditions and economic growth rates have
had, and may continue to have, an unpredictable or adverse effect on energy
prices.

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28

The following table sets forth historical revenue and expense
information for the periods indicated (in thousands, except average sales price
and operating cost data).

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------------------------------- -------------------
Pro Forma Pro Forma
1991 1992 1993 1994 1995 1995 1996 1996
--------- ---------- ---------- ---------- --------- ----------- ---------- ---------

Production (a)
Oil (Bbl) 129 199 318 640 913 1,047 261 279
Gas (Mcf) 1,334 1,796 2,590 6,996 12,471 21,314 4,983 5,784
Mcfe 2,108 2,990 4,498 10,836 17,949 27,595 6,547 7,459
Revenues
Oil $ 2,438 $ 3,660 $ 5,118 $ 9,743 $15,133 $17,357 $ 4,544 $ 4,887
Gas 2,946 4,043 6,014 14,718 22,284 37,609 11,544 12,904
--------- ---------- ---------- ---------- --------- ----------- ---------- ----------
Total $ 5,384 $ 7,703 $11,132 $24,461 $37,417 $54,966 $16,088 $17,791
Direct operating
expenses 2,165 3,019 4,438 10,019 14,930 20,985 5,758 6,320
--------- ---------- ---------- ---------- --------- ----------- ---------- ----------
Gross margin $ 3,219 $ 4,684 $ 6,694 $14,442 $22,487 $33,981 $10,330 $ 11,471
========= ========== ========== ========== ========= =========== ========== ==========

Average Sales Price
Oil (Bbl) $ 18.91 $ 18.40 $ 16.07 $ 15.23 $ 16.57 $ 16.58 $ 17.43 $ 17.50
Gas (Mcf) $ 2.21 $ 2.25 $ 2.32 $ 2.10 $ 1.79 $ 1.76 $ 2.32 2.23
Mcfe $ 2.56 $ 2.58 $ 2.47 $ 2.26 $ 2.08 $ 1.99 $ 2.46 $ 2.39
Average Operating
Cost Per Mcfe $ 1.03 $ 0.99 $ 0.98 $ 0.93 $ 0.83 $ 0.76 $ 0.88 $ 0.85

(a) Oil is converted to Mcfe at a rate of 6 Mcf per barrel.

On a Mcfe basis, approximately 69% of 1995 production was natural gas.
Gas production was sold to utilities, brokers or directly to industrial users.
Gas sales are made pursuant to various arrangements ranging from month-to-month
contracts, one year contracts at fixed or variable prices and contracts at fixed
prices for the life of the well. All contracts other than the fixed price
contracts contain provisions for price adjustment, termination and other terms
customary in the industry. A number of the Appalachian gas contracts hold
favorable sales prices when compared to spot market prices. Oil is sold on a
basis such that the purchaser can be changed on 30 days notice. The price
received is generally equal to a posted price set by the major purchasers in the
area. Oil purchasers are selected on the basis of price and service. In 1995,
revenues from oil and gas production amounted to $37.4 million, representing 72%
of revenues. Oil and gas revenues for 1995 increased 53% over 1994.

FIELD SERVICES

The field services area is comprised of three components -- well
operations, brine disposal and well servicing. As of December 31, 1995, Lomak
acted as operator of, or provided pumping services for, over 6,200 wells. Lomak
performs virtually all day-to-day services required by these operations, rather
than subcontracting them. For its services, Lomak receives a monthly fee plus
reimbursement of third party charges.

Prior to 1995, Lomak conducted brine disposal and well servicing
operations on its properties as well as for third parties primarily in Ohio and
to a lesser extent in Pennsylvania and Texas. In 1994, Lomak sold substantially
all of brine disposal and well servicing assets located in Ohio. Through an
acquisition completed in early 1995, the Company began conducting brine disposal
and well services in Oklahoma.

In total, field services provided revenues of $10.1 million in 1995,
representing 19% of total revenues. Field service revenues for 1995 increased
32% over the prior year.

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29

GAS TRANSPORTATION AND MARKETING

The gas transportation and marketing revenues are comprised of fees for
the transportation of production through gathering lines and, to a lesser
extent, income from marketing of oil and gas. In 1994, the Company began to take
a more active role in marketing both its oil and gas production. As a result, at
year end 1995, the Company was marketing approximately 90 MMcfe per day,
including its production and the production of third parties. Gas transportation
and marketing revenues were $2.2 and $3.3 million for 1994 and 1995,
respectively.

The Company has currently hedged through the financial markets less
than 3% of its monthly production through September 1996. These hedges involve
fixed price arrangements and other price arrangements at a variety of prices,
floors and caps. Although these hedging activities provide the Company some
protection against falling prices, these activities also reduce the potential
benefits to the Company of price increases above the levels of the hedges. In
the future, the Company may increase the percentage of its production covered by
hedging arrangements, however, it currently anticipates that such percentage
would not exceed 50%.

The Company prefers to hedge its gas production through fixed price gas
contracts. At December 31, 1995, approximately 42% of the Company's gas
production was under fixed priced arrangements. These contracts vary in length
from one year to the life-of-the-well. A majority of the contracts are for three
years or less. Essentially all these contracts are with industrial end-users and
utilities.

INTEREST AND OTHER

The Company earns interest on its cash and investment accounts, as well
as on various notes receivable. Other income in 1995 was comprised principally
of gains on sales of non-strategic properties and various fees charged to third
parties. The Company expects to continue to sell assets which have no strategic
benefit. Interest and other income in 1995 amounted to $1.3 million,
representing 3% of total revenues. Revenues from interest and other for 1995
increased 180% from the 1994 level.

COMPETITION

The Company encounters substantial competition in acquiring properties,
marketing oil and gas, securing personnel and conducting its field services
operations. Many competitors have financial and other resources which
substantially exceed those of the Company. The competitors in acquisitions,
development, exploration and production include the major oil companies in
addition to numerous independents, individual proprietors and others. Therefore,
competitors may be able to pay more for desirable leases and to evaluate, bid
for and purchase a greater number of properties or prospects than the financial
or personnel resources of the Company permit. The ability of the Company to
replace and expand its reserve base in the future will be dependent upon its
ability to select and acquire suitable producing properties and prospects for
future drilling.

The Company's acquisitions have been partially financed through
issuances of equity and debt securities and internally generated cash flow. The
competition for capital to finance oil and gas acquisitions and drilling is
intense. The ability of the Company to obtain such financing is uncertain and
can be affected by numerous factors beyond its control. The inability of the
Company to raise capital in the future could have an adverse effect on certain
areas of its business.

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30

OIL AND GAS RESERVES
The following table sets forth estimated proved reserves for each year
in the five year period ended December 31, 1995 and pro forma as of March 31,
1996.

DECEMBER 31,
-------------------------------------------------------------------------------------

PRO FORMA
1991 1992 1993 1994 1995 1995 (1)

Crude oil (MBbl)
Developed........................... 1,609 1,643 3,344 6,430 8,880 10,603
Undeveloped......................... 245 337 1,195 2,019 1,983 4,133
--------- -------- --------- --------- --------- ---------
Total............................ 1,854 1,980 4,539 8,449 10,863 14,736
========= ======== ========= ========= ========= =========
Natural gas (MMcf)
Developed........................... 8,318 13,171 38,373 97,251 174,958 229,180
Undeveloped......................... 221 4,444 36,190 52,119 57,929 86,141
--------- -------- --------- --------- --------- ---------
Total............................ 8,539 17,615 74,563 149,370 232,887 315,321
--------- -------- --------- --------- --------- ---------
Total equivalent barrels (MMcfe)....... 19,663 29,495 101,797 200,064 298,068 403,738
========= ======== ========= ========= ========= =========

(1) See "Business-Pro Forma Reserve Information."

Proved developed reserves are expected to be recovered from existing
wells with existing equipment and operating methods. Proved undeveloped
reserves are expected to be recovered from new wells drilled to known reservoirs
on undrilled acreage for which the existence and recoverability of such reserves
can be estimated with reasonable certainty. On a Mcfe basis, approximately
77% of the Company's proved reserves were developed at December 31, 1995.
At December 31, 1995, approximately 93% of the proved reserves set forth above
were evaluated by independent petroleum consultants, while the remainder was
evaluated by the Company's engineering staff. See "Pro Forma Reserve
Information" below regarding the evaluation of proved reserves at December 31,
1995.

The following table sets forth as of December 31, 1995 the estimated
future net cash flow from and the present value of the proved reserves.
Future net cash flow represents future gross cash flow from the production
and sale of proved reserves, net of production costs (including production
taxes, ad valorem taxes and operating expenses) and future development costs.
Such calculations, which are prepared in accordance with the Statement of
Financial Accounting Standards No. 69 "Disclosures about Oil and Gas
Producing Activities" are based on cost and price factors on December 31,
1995. Average product prices in effect at December 31, 1995 were $18.14
per barrel of oil and $2.28 per Mcf of gas. There can be no assurance that
the proved reserves will be developed within the periods indicated or that
prices and costs will remain constant. There are numerous uncertainties
inherent in estimating reserves and related information and different reservoir
engineers often arrive at different estimates for the same properties. No
estimates of reserves have been filed with or included in reports to another
federal authority or agency since December 31, 1995.

Developed Undeveloped Total
----------------- ----------------- -----------------
(in thousands)

Future net cash flow from estimated
production of proved reserves
1996 $ 40,215 $ (10,815) $ 29,400
1997 35,979 (4,394) 31,585
1998 33,161 7,663 40,824
Remainder 219,126 91,703 310,829
----------------- ----------------- -----------------
Total $ 328,481 $ 84,157 $ 412,638
================= ================= =================

Present value
Pre-tax $ 195,554 $ 33,684 $ 229,238
================= ================= =================
After-tax $ 148,475 $ 25,575 $ 174,050
================= ================= =================

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31

PRO FORMA RESERVE INFORMATION

The following table sets forth summary pro forma information with respect
to the Company's estimated proved oil and gas reserves as of December 31, 1995,
giving effect to acquisitions completed from January 1, 1996 through April 30,
1996. The reserve information below is based on reserve evaluations for each
property group and in most cases each reserve evaluation had an effective date
varying from December 31, 1995 through April 30, 1996. These reserve evaluations
were adjusted by the Company's engineering staff to December 31, 1995 by
adjusting production to December 31, 1995 depending on the effective date of
each respective evaluation. Therefore, the reserve information below does not
reflect production revisions or changes in oil and gas prices, changes in
expectations or changes in estimates of recoverable reserves resulting from
price changes. Approximately 93% of December 31, 1995 reserve information was
prepared by independent petroleum consultants. The "Recent Appalachian
Acquisitions" and "Recent Mid-Continent Acquisitions" reserve information, as
well as the "Adjustments" information, were prepared by the Company's
engineering staff. All estimates of oil and gas reserves are subject to
significant uncertainty. See "Investment Considerations-Uncertainty of Estimates
of Reserves and Future Net Revenues."

PRO FORMA RESERVE INFORMATION
-----------------------------------------------------------------
HISTORICAL RECENT RECENT PRO FORMA
DECEMBER APPALACHIAN MIDCONTINENT DECEMBER 31,
1995 ACQUISITIONS ACQUISITIONS 1995
-----------------------------------------------------------------

Proved reserves...
Oil (MBbls) 10,863 106 3,767 14,736
Gas (Mmcf) 232,887 21,888 60,546 315,321
MMcfe 298,068 22,526 83,141 403,738

Estimated future net cash flow $412,638 $38,699 $102,194 $553,531
(thousands)

Pre-tax present value (thousands) $229,238 $20,140 $49,963 $299,341

Average product prices
Oil (per Bbl) $18.14 $16.84 $17.07 $17.96
Gas (per Mcf) $ 2.28 $2.58 $1.84 $ 2.22

SIGNIFICANT PROPERTIES

Until 1990, virtually all of the Company's properties were located in
Ohio. Since that time, properties have been acquired in Texas and Oklahoma and
other areas of Appalachia. At December 31, 1995, on a pro forma pre-tax
present value basis, 48% of the reserves were located in Appalachia, 23% were
in Oklahoma and 20% were in Texas. The Company also held interests in 272,200
gross (211,200 net) undeveloped acres at December 31, 1995. The following
table sets forth information with respect to the Company's estimated pro forma
proved oil and gas reserves as of December 31, 1995.

Present Value
------------------------- Crude Natural
Amount % Oil Gas Equiv.
----------- --------- ---------- ----------- ----------
(MBbl) (Bcf) (Bcfe)

Appalachia $142,306 48% 1,338 189,668 196,657
Oklahoma 69,452 23 2,149 79,803 92,699
Texas 61,237 20 6,995 27,440 70,446
Other 26,346 9 4,254 18,410 43,936
----------- --------- ---------- ----------- ----------
Total.... $299,341 100% 14,736 315,321 403,738
=========== ========= ========== =========== ==========

31
32

The largest concentration of reserves is in Appalachia with 48% of
total present value. On an Mcfe basis, gas accounts for approximately 96%
of these reserves. These reserves are ascribed to over 5,200 wells
located in Pennsylvania, Ohio, West Virginia and New York. The Company
operates nearly all of these wells. The reserves produce principally from
the Medina, Clinton, Upper Devonian and Rose Run formations at depths of
3,000 to 7,000 feet. After initial flush production, these properties are
characterized by extremely gradual decline rates and often have a
projected life of more than twenty years. Gas production is transported
through Company-owned gas gathering systems and is sold primarily to
utilities and industrial end-users.

The second largest concentration of reserves is in Oklahoma, totaling
23% of present value. On an Mcfe basis, gas makes up 83% of these reserves.
The largest portion of these reserves is ascribed to over 257 operated
wells in and around the Okeene Field of the Anadarko Basin. These wells
produce from numerous formations ranging in depth from approximately 6,000
to 9,000 feet. The properties have a projected remaining life of over fifteen
years. Gas production is sold primarily to Phillips Petroleum and Natural Gas
Clearinghouse on an index or percent of plant proceeds basis.

The third largest concentration of reserves is in Texas, totaling
20% of present value. On an Mcfe basis, oil makes up 67% of the reserves.
The largest portion of these reserves is ascribed to 354 operated wells in
the Big Lake Area of west Texas. These wells produce from the San
Andres/Grayburg formation at a depth of approximately 2,500 feet. The
properties have a projected remaining life of over 25 years. Over 80% of
these reserves are oil. Oil production is sold to Scurlock Permian and gas to
J.L. Davis Company. The second largest portion of these reserves are
ascribed to 93 operated wells in the Laura La Velle Field in east Texas.
These wells produce from the shallow Carrizo section of the Wilcox
formation at a depth of approximately 1,600 feet. These properties have a
projected remaining life of twenty years. All of the reserves are oil and
production is sold to Texaco. The third largest portion is in Hagist Ranch
Field in south Texas. The Company operates 62 wells in this field which
produces primarily from the Wilcox at approximately 8,000 feet. Arco
purchases the gas production from the Hagist Ranch Field.

PRODUCTION
Production revenue is generated through the sale of oil and gas from
properties held directly and through partnerships and joint ventures.
Additional revenue is received from royalties. Oil and gas production is sold
to a limited number of purchasers. Through March 31, 1996, no one purchaser
accounted for more than 10% of total oil and gas revenues. Management believes
that the loss of any one purchaser would not have a material adverse effect on
the Company's business. Proximity to local markets, availability of competitive
fuels and overall supply and demand are factors affecting the ability to market
production. There has been a worldwide surplus of oil and gas for more than a
decade which has weakened oil prices and particularly recently, depressed the
price of natural gas. While the Company anticipates an upward trend in energy
prices, factors outside its control such as political developments in the
Middle East, overall energy supply, weather conditions and economic growth
rates have had, and may continue to have, an unpredictable or adverse effect on
energy prices.

32
33

The following table sets forth historical revenue and expense
information for the periods indicated (in thousands, except sales price
and operating cost data). See the Pro Forma Combined Financial Statements
included herein for a discussion of the preparation of the pro forma data.

THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------------------------------------- -------------------------
Pro Forma Pro Forma
1991 1992 1993 1994 1995 1995 1996 1996
---------- ---------- ---------- ---------- --------- ----------- ---------- ----------

OPERATING DATA:
Production
Oil (Bbl) 129 199 318 640 913 1,047 261 279
Gas (Mcf) 1,334 1,796 2,590 6,996 12,471 21,314 4,983 5,784
Mcfe 2,108 2,990 4,498 10,836 17,949 27,595 6,547 7,459
Revenues
Oil $2,438 $3,660 $ 5,118 $ 9,743 $ 15,133 $ 17,357 $ 4,544 $ 4,887
Gas 2,946 4,043 6,014 14,718 22,284 37,609 11,544 12,904
---------- ---------- ---------- ---------- --------- ----------- ---------- ----------
Total $5,384 $7,703 $11,132 $24,461 $ 37,417 $ 54,966 $ 16,088 $ 17,791
========== ========== ========== ========== ========= =========== ========== ==========
Average Sales Price
Oil (Bbl) $ 18.91 $ 18.40 $ 16.07 $ 15.23 $ 16.57 $ 16.58 $ 17.43 $ 17.50
Gas (Mcf) $ 2.21 $ 2.25 $ 2.32 $ 2.10 $ 1.79 $ 1.76 $ 2.32 $ 2.23
Mcfe $ 2.56 $ 2.58 $ 2.47 $ 2.26 $ 2.08 $ 1.99 $ 2.46 $ 2.39

Average Operating
Cost
Per Mcfe $ 1.03 $ 0.99 $ 0.98 $ 0.93 $ 0.83 $ 0.76 $ 0.88 $ 0.85

For 1995 and the three months ended March 31, 1996, natural gas
accounted for over 69% of total production on an Mcfe basis. Gas production
was sold primarily to utilities and directly to industrial users. Gas sales
are made pursuant to various arrangements ranging from month-to-month
contracts, one year contracts at fixed or variable prices and contracts at
fixed prices for the life of the well. All contracts other than the fixed price
contracts contain provisions for price adjustment, termination and other
terms customary in the industry. A number of the Appalachian gas contracts
hold favorable sales prices when compared to market spot prices. Oil is
sold on a basis such that the purchaser can be changed on 30 days notice.
The price received is generally equal to a posted price set by the major
purchasers in the area. Oil purchasers are selected on the basis of price and
service.

PRODUCING WELLS
The following table sets forth certain information relating to
productive wells at March 31, 1996. The Company owns royalty interests in an
additional 592 wells. Wells are classified as oil or gas according to
their predominant production stream.

AVERAGE WORKING
GROSS WELLS NET WELLS INTEREST
PRINCIPAL PRODUCT STREAM
Crude oil 1,430 641 45%
Natural gas 5,398 4,487 83%
----------- ---------
Total 6,828 5,128 75%
=========== =========
ACREAGE

The following table sets forth the developed and undeveloped gross and net
acreage held at March 31, 1996.

AVERAGE WORKING
INTEREST
GROSS WELLS NET ACREAGE

Developed 478,700 340,300 71%
Undeveloped 272,200 211,200 78%
----------- ---------
Total 750,900 551,500 73%
=========== =========

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34

DRILLING RESULTS

The following table summarizes actual drilling activities for the three
years ended December 31, 1995 and the three months ended March 31, 1996. The
drilling results below do not reflect acquisitions, on a pro forma basis, as the
drilling results on the acquired properties are not reflective of the Company's
drilling results.

YEAR ENDED DECEMBER 31,
-----------------------------------------------------
Three Months
Ended March 31,
1993 1994 1995 1996
----------------- ---------------- ----------------- -----------------

Drilling:
Development wells:
Gross 24.0 62.0 55.0 8.0
Net 17.4 56.6 39.0 7.2
Exploratory wells:
Gross 6.0 9.0 7.0 1.0
Net 1.0 1.6 0.6 0.5
Total:
Gross 30.0 71.0 62.0 9.0
Net 18.4 58.2 39.6 7.7

Drilling Results:
Productive wells:
Gross 25.0 64.0 58.0 8.0
Net 16.5 56.4 39.2 7.2
Dry holes:
Gross 5.0 7.0 4.0 1.0
Net 1.9 1.8 0.4 0.5

FACILITIES
The Company owns a 24,000 square foot facility located on approximately
seven acres near Hartville, Ohio. The facility houses certain operating and
administrative personnel. The Company leases approximately 16,000 square feet
in Fort Worth and Oklahoma City under standard office lease arrangements that
expire at various times through July 2001. All facilities are adequate to meet
the Company's existing needs and can be expanded with minimal expense.

The Company owns various rolling stock and other equipment which is used in
its field operations. Such equipment is believed to be in good repair and, while
such equipment is important to its operations, it can be readily replaced as
necessary.

EMPLOYEES
As of June 25, 1996 the Company had 297 full-time employees, 195 of
whom were field personnel. None are covered by a collective bargaining
agreement and management believes that its relationship with its employees is
good.

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35

REGULATION

The Company's oil and gas production and transportation operations are
subject to various types of regulation, including regulation by state and
federal agencies. Although such regulations have an impact on the Company and
others in the oil, gas and pipeline industry, the Company does not believe that
it is affected in a significantly different manner by these regulations than
others in the oil and gas industry.

Legislation affecting the oil and gas industry is under constant review for
amendment or expansion. Numerous departments and agencies, both federal and
state, are authorized by statute to issue, and have issued, rules and
regulations binding on the oil and gas industry and its individual members. The
failure to comply with such rules and regulations can result in substantial
penalties. Many states require permits for drilling operations, drilling bonds
and reports concerning operations. Many states also have statutes or regulations
addressing conservation matters, including provisions for the unitization or
pooling of oil and gas properties, the establishment of maximum rates of
production from oil and gas wells and the regulation of spacing, plugging and
abandonment of such wells. Some state statutes and regulations limit the rate at
which oil and gas can be produced from the Company's properties. See "Investment
Considerations-Laws and Regulations."

In 1992, the Federal Energy Regulatory Commission ("FERC") issued Order No.
636 pertaining to pipeline restructuring. This rule requires interstate
pipelines to unbundle transportation and sales services by separately stating
the price of each service and by providing customers only the particular service
desired, without regard to the source for purchase of the gas. The rule also
requires pipelines to (i) provide nondiscriminatory notice service allowing firm
commitment shippers to receive delivery of gas on demand up to certain limits
without penalties; (ii) establish a basis for release and reallocation of
capacity; and (iii) provide nondiscriminatory access to capacity by firm
transportation shippers on a downstream pipeline.

The Company's operations are subject to extensive federal, state and local
laws and regulations relating to the generation, storage, handling, emission,
transportation and discharge of materials into the environment. Permits are
required for the operation of various of the Company's facilities, and these
permits are subject to revocation, modification and renewal by issuing
authorities. Governmental authorities have the power to enforce compliance with
their regulations, and violations are subject to fines, injunctions or both. It
is possible that increasingly strict requirements will be imposed by
environmental laws and enforcement policies thereunder. It is not anticipated
that the Company will be required in the near future to expend amounts that are
material in relation to its total capital expenditures program by reason of
environmental laws and regulations, but inasmuch as such laws and regulations
are frequently changed, the Company is unable to predict the ultimate cost of
such compliance. See "Risk Factors-Laws and Regulations."

LEGAL PROCEEDINGS

The Company is involved in various legal actions and claims arising in the
ordinary course of business. In the opinion of management, such litigation and
claims will be resolved without material adverse effect on the Company's
financial position.

CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANTS

At a meeting on May 25, 1994, the Board of Directors of the Company
approved the engagement of Arthur Andersen & Co. as its independent auditors for
the fiscal year ending December 31, 1994. The audit committee of the Board of
Directors approved the change in auditors on May 25, 1994.

The reports of Ernst & Young on the Company's financial statements for the
previous two fiscal years did not contain any adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles.

In connection with the audits of the Company's financial statements for
each of the two fiscal years ended December 31, 1993, and in the subsequent
interim period, there were no disagreements with Ernst & Young on any matters of
accounting principles or practices, financial statement disclosures or auditing
scope or procedures which, if not resolved to the satisfaction of Ernst & Young
would have caused Ernst & Young to make reference to the matter in their report.

MANAGEMENT

The current executive officers and directors of the Company are listed
below, together with a description of their experience and certain other
information. Each of the directors was elected for a one-year term at the
Company's 1996 annual meeting of stockholders. Executive officers are appointed
by the Board of Directors.

HELD
NAME AGE OFFICE SINCE POSITION WITH COMPANY
---- --- ------------ ---------------------
Thomas J. Edelman 45 1988 Chairman and Chairman of the
Board
John H. Pinkerton 42 1988 President, Chief Executive
Officer and Director
Robert E. Aikman 64 1990 Director
Allen Finkelson 50 1994 Director
Anthony V. Dub 46 1995 Director
Ben A. Guill 45 1995 Director
C. Rand Michaels 59 1976 Vice Chairman and Director
Jeffery A. Bynum 41 1985 Vice President-Land
Steven L. Grose 47 1980 Vice President-Appalachia
Region
Chad L. Stephens 41 1990 Vice President-Midcontinent
Region
Thomas W. Stoelk 41 1994 Vice President-Finance
Danny M. Sowell 46 1996 Vice President-Gas Management
John R. Frank 40 1990 Controller
Geoffrey T. Doke 30 1996 Treasurer

THOMAS J. EDELMAN, holds the office of Chairman and is Chairman of the
Board of Directors. Mr. Edelman joined the Company in 1988 and served as its
Chief Executive Officer until 1992. Since 1981, Mr. Edelman has been a director
and President of Snyder Oil Corporation. In 1996, Mr. Edelman was appointed
Chairman and Chief Executive Officer of Patina Oil and Gas Corporation, and
affiliate of Snyder Oil Corporation. Prior to 1981, Mr. Edelman was a Vice
President of The First Boston Corporation. From 1975 through 1980, Mr. Edelman
was with Lehman Brothers Kuhn Loeb Incorporated. Mr. Edelman received his
Bachelor of Arts Degree from Princeton University and his Masters Degree in
Finance from Harvard University's Graduate School of Business Administration.
Mr. Edelman is also a director of Petroleum Heat & Power Co., Inc., a
Connecticut based fuel oil distributor, Star Gas Corporation, a private company
which distributes propane gas and Command Petroleum Limited, an international
exploration and production company affiliated with Snyder Oil Corporation.

JOHN H. PINKERTON, President, Chief Executive Officer and a Director,
joined the Company in 1988. He was appointed President in 1990 and Chief
Executive Officer in 1992. Previously, Mr. Pinkerton was Senior Vice
President-Acquisitions of SOCO. Prior to joining SOCO in 1980, Mr. Pinkerton was
with Arthur Andersen & Co. Mr. Pinkerton received his Bachelor of Arts Degree in
Business Administration from Texas Christian University and his Master of Arts
Degree in Business Administration from the University of Texas.

ROBERT E. AIKMAN, a Director, joined the Company in 1990. Mr. Aikman has
more than 40 years experience in petroleum and natural gas exploration and
production throughout the United States and Canada. From 1984 to 1994 he was
Chairman of the Board of Energy Resources Corporation. From 1979 through 1984,
he was the President and principal shareholder of Aikman Petroleum, Inc. From
1971 to 1977, he was President of Dorchester Exploration Inc., and from 1971 to
1980, he was a Director and a Member of the Executive Committee of Dorchester
Gas Corporation. Mr. Aikman is also Chairman of Provident Trade Company,
President of EROG, Inc., and President of The Hawthorne Company, an entity which
organizes joint ventures and provides advisory services for the acquisition of
oil and gas properties, including the financial restructuring, reorganization
and sale of companies. He was President of Enertec Corporation which was
reorganized under Chapter 11 of the Bankruptcy Code in December 1994. In
addition, Mr. Aikman is a director of the Panhandle Producers and Royalty Owners
Association and a member of the Independent Petroleum Association of America,
Texas Independent Producers and Royalty Owners Association and American
Association of Petroleum Landmen. Mr. Aikman graduated from the University of
Oklahoma in 1952.

ALLEN FINKELSON, was appointed a Director in 1994. Mr. Finkelson has been a
partner at Cravath, Swaine & Moore since 1977, with the exception of the period
from September 1983 through August 1985, when he was a managing director of
Lehman Brothers Kuhn Loeb Incorporated. Mr. Finkelson was first employed by
Cravath, Swaine & Moore as an associate in 1971. Mr. Finkelson received his
Bachelor of Arts Degree from St. Lawrence University and his Doctor of Laws
Degree from Columbia University School of Law.

ANTHONY V. DUB, was elected to serve as a Director of the Company in 1995.
Mr. Dub is Managing Director-Senior Advisor of CS First Boston, an international
investment banking firm with headquarters in New York City. Mr. Dub joined CS
First Boston in 1971 and was named a Managing Director in 1981. Mr. Dub received
his Bachelor of Arts Degree from Princeton University in 1971.

BEN A. GUILL, was elected to serve as a Director of the Company in 1995.
Mr. Guill is a Partner and Managing Director of Simmons & Company International,
an investment banking firm located in Houston, Texas focused exclusively on the
oil service and equipment industry. Mr. Guill has been with Simmons & Company
since 1980. Prior to joining Simmons & Company, Mr. Guill was with Blyth Eastman
Dillon & Company from 1978 to 1980. Mr. Guill received his Bachelor of Arts
Degree from Princeton University and his Masters Degree in Finance from the
Wharton Graduate School of Business at the University of Pennsylvania.

C. RAND MICHAELS, who holds the office of Vice Chairman and is a
Director, served as President and Chief Executive Officer of the Company from
1976 through 1988 and Chairman of the Board from 1984 through 1988, when he
became Vice Chairman. Mr. Michaels received his Bachelor of Science Degree from
Auburn University and his Master of Business Administration Degree from the
University of Denver. Mr. Michaels is also a director of American Business
Computers Corporation of Akron, Ohio, a public company serving the beverage
dispensing and fast food industries.

JEFFERY A. BYNUM, Vice President-Land and Secretary, joined the Company in
1985. Previously, Mr. Bynum was employed by Crystal Oil Company and Kinnebrew
Energy Group of Shreveport, Louisiana. Mr. Bynum holds a Professional
Certification with American Association of Petroleum Landmen and attended
Louisiana State University in Baton Rouge, Louisiana and Centenary College in
Shreveport, Louisiana.

STEVEN L. GROSE, Vice President-Appalachia Region, joined the Company in
1980. Previously, Mr. Grose was employed by Halliburton Services, Inc. as a
Field Engineer from 1971 until 1974. In 1974, he was promoted to District
Engineer and in 1978, was named Assistant District Superintendent based in
Pennsylvania. Mr. Grose is a member of the Society of Petroleum Engineers and a
trustee of The Ohio Oil and Gas Association. Mr. Grose received his Bachelor of
Science Degree in Petroleum Engineering from Marietta College.

37
38

CHAD L. STEPHENS, Vice President-Midcontinent Region, joined the Company in
1990. Previously, Mr. Stephens was a landman with Duer Wagner & Co., an
independent oil and gas producer, since 1988. Prior thereto, Mr. Stephens was an
independent oil operator in Midland, Texas for four years. From 1979 to 1984,
Mr. Stephens was a landman for Cities Service Company and HNG Oil Company. Mr.
Stephens received his Bachelor of Arts Degree in Finance and Land Management
from the University of Texas.

THOMAS W. STOELK, Vice President - Finance and Chief Financial Officer,
joined the Company in 1994. Mr. Stoelk is a Certified Public Accountant and was
a Senior Manager with Ernst & Young LLP. Prior to rejoining Ernst & Young LLP in
1986 he was with Partners Petroleum, Inc. Mr. Stoelk received his Bachelor of
Science Degree in Industrial Administration from Iowa State University.

DANNY M. SOWELL, Vice President - Gas Management, joined the Company in
1996. Previously, Mr. Sowell was Chief Executive Officer and President of Jay
Gas Marketing, which Lomak acquired May 1, 1996. Prior to starting Jay Gas, Mr.
Sowell was Director of Marketing for Oklahoma Gas & Electric Company's gas
subsidiary. Mr. Sowell received his Master and Bachelor of Science Degrees in
Mathematics from Lamar University.

JOHN R. FRANK, Controller and Chief Accounting Officer, joined the Company
in 1990. From 1989 until he joined Lomak in 1990, Mr. Frank was Vice President
Finance of Appalachian Exploration, Inc. Prior thereto, he held the positions of
Internal Auditor and Treasurer with Appalachian Exploration, Inc. beginning in
1977. Mr. Frank received his Bachelor of Arts Degree in Accounting and
Management from Walsh College and attended graduate studies at the University of
Akron.

GEOFFREY T. DOKE, Treasurer, joined the Company in 1991. He was appointed
Treasurer in 1996. Previously, Mr. Doke was employed by Edisto Resources
Corporation of Dallas, Texas. Mr. Doke received his Bachelor of Business
Administration Degree in Finance and International Business from Baylor
University and his Master of Business Administration Degree from Case Western
Reserve University.

The Lomak Board has established three committees to assist in the
discharge of its responsibilities.

EXECUTIVE COMMITTEE. The Executive Committee reviews and authorizes
actions required in the management of the business and affairs of Lomak, which
would otherwise be determined by the Board, where it is not practicable to
convene the full Board. One of the principal responsibilities of the Executive
Committee will be to review and approve smaller acquisitions. The members of the
Executive Committee are Messrs. Edelman, Finkelson and Pinkerton.

COMPENSATION COMMITTEE. The Compensation Committee reviews and approves
executive salaries and administers bonus, incentive compensation and stock
option plans of Lomak. This Committee advises and consults with management
regarding pensions and other benefits and significant compensation policies and
practices of Lomak. This Committee also considers nominations of candidates for
corporate officer positions. The members of Compensation committee are Messrs.
Aikman, Finkelson and Guill.

AUDIR COMMITTEE. The Audit Committee reviews the professional services
provided by Lomak's independent public accountants and the independence of such
accountants from management of Lomak. This Committee also reviews the scope of
the audit coverage, the annual financial statements of Lomak and such other
matters with respect to the accounting, auditing and financial reporting
practices and procedures of Lomak as it may find appropriate or as have been
brought to its attention. The members of the audit committee are Messrs. Aikman,
Dub and Guill.

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39

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth information for the fiscal years ended
December 31, 1995, 1994, and 1993 respecting all compensation awarded to, earned
by or paid to all persons who were chief executive officers at anytime in 1995
and the four highest paid executive officers, other than the Chief Executive
Officer, whose aggregate annual salary and bonuses exceeded $100,000 for the
1995 fiscal year (the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

Long-term
Annual Compensation Compensation
------------------------- -------------------
Name and Stock Option All Other
Principal Position Year Salary Bonus(a) Awards (#) Compensation(b)
- -------------------------------- ---------- ------------- ----------- ------------------- -------------------

Thomas J. Edelman 1995 $120,480 $ 63,750 50,000 $ 10,608
Chairman 1994 100,000 37,500 50,000 8,246
1993 50,000 50,000 50,000 2,808

John H. Pinkerton 1995 151,750 147,500 50,000 14,062
President & Chief Executive 1994 145,846 108,500 50,000 13,610
Officer 1993 123,000 75,500 25,000 12,733

C. Rand Michaels 1995 100,000 29,000 25,000 8,378
Vice Chairman 1994 100,000 23,500 25,000 8,246
1993 100,000 22,500 25,000 8,246

Chad L. Stephens 1995 89,788 41,250 25,000 7,093
Vice President-Midcontinent 1994 76,192 37,000 25,000 5,460

Thomas W. Stoelk 1995 98,471 31,250 25,000 8,159
Vice President-Finance

(a) Includes amounts earned or vested in the specified fiscal year, whether or not received during such
fiscal year. Annual bonuses are awarded with 50% of the amount payable in the year of the award,
25% vesting on January 1 of the year following the award and the remaining 25% vesting on
January 1 of the second year after the award. These bonuses are payable, at the option of the
employee, in cash or shares of the Company's Common Stock valued at 75% of the prevailing market
rate at the time of the award. An employee must be employed by the Company at the time of vesting
in order to receive the vested bonus previously granted to such employee. The restricted
stock issued pursuant to the bonuses represent unregistered shares and therefore initially
cannot be sold by the recipient.

(b) Represents amounts contributed by the Company to the Employee 401(k) Plan.

39
40

STOCK OPTION GRANTS AND EXERCISES

The Company's stock option plan, which is administered by the
Compensation Committee, provides for the granting of options to purchase shares
of Common Stock to key employees and certain other persons who are not employees
for advice or other assistance or services to the Company. The plan permits
optionees to acquire up to 2.0 million shares of Common Stock to be outstanding
at any time subject to the limitation that the outstanding options cannot exceed
10% of all outstanding Common Stock on a fully diluted basis. All options issued
under the plan vest 30% after one year, 60% after two years and 100% after three
years. At March 31, 1996 a total of 1.2 million options had been granted under
the plan of which 493,000 were exercisable at that date. The options outstanding
at March 31, 1996 were granted at exercise prices ranging from $3.38 to $10.50
per share. The exercise price of all such options is equal to the fair market
value of the Common Stock on the date of grant.

The Company's 1994 Outside Directors Stock Option Plan (the "Directors
Plan"), which is administered by the Compensation Committee, provides for the
granting of options to purchase shares of Common Stock to outside directors of
the Company. The plan permits optionees to acquire up to 200,000 shares of
Common Stock and all options issued under the plan vest 30% after one year, 60%
after two years and 100% after three years. At March 31, 1996 a total of 44,000
options were outstanding under the Directors Plan of which 3,600 were
exercisable as of that date. The options outstanding at March 31, 1996 were
granted at exercise prices ranging from $7.75 to $8.00 per share. The exercise
price of all such options was equal to the fair market value of the Common Stock
on the date of grant.

STOCK OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information for the fiscal year ended
December 31, 1995, respecting the grant of stock options to the Named Executive
Officers. The stock options were granted at the market price on the date of
grant. No stock appreciation rights have ever been granted by the Company.

Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
-------------------------------------------------------- ------------------------
Number of Percent of
securities Total Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted (#) Fiscal Year Price Date 5% 10%
- ---------------------- -------------- ---------------- ----------- ------------ ----------- ------------

Thomas J. Edelman 50,000 14.6% $ 7.00 3/17/00 $96,500 $213,500
John H. Pinkerton 50,000 14.6% 7.00 3/17/00 96,500 213,500
C. Rand Michaels 25,000 7.3% 7.00 3/17/00 48,250 106,750
Chad Stephens 25,000 7.3% 7.00 3/17/00 48,250 106,750
Thomas W. Stoelk 25,000 7.3% 7.00 3/17/00 48,250 106,750

(a) The assumed annual rates of stock price appreciation used in showing the
potential realization value of stock option grants are prescribed by the
Securities and Exchange Commission. The actual realized value of the
options may be significantly greater or less than assumed amounts. For
options granted in 1995, the values shown for 5% and 10% appreciation
equate to a stock price of $8.93 and $11.27, respectively, at the
expiration date of the options.

YEAR END OPTION VALUES TABLE

The following table sets forth information at December 31, 1995,
respecting exercisable and non exercisable options held by the Named Executive
Officers. The table also includes the value of "in-the-money" options which
represents the spread between the exercise price of the existing stock options
and the year end Common Stock price of $9.75.

Number of Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Shares Year End 1995 Year End 1995
Acquired on Value (Unexercisable (U)/ (Unexercisable (U)/
Name Exercise (#) Realized Exercisable (E)) Exercisable (E))
- -------------------------- -------------- ------------- ----------------------- --------------------

Thomas J. Edelman -0- $ -0- 105,000 U $197,500 U
45,000 E 33,750E

John H. Pinkerton -0- -0- 87,667 U 202,348 U
152,333 E 891,018 E

C. Rand Michaels 17,167 58,595 45,768 U 110,131 U
24,065 E 92,855 E

Chad Stephens 13,333 26,666 45,967 U 111,052 U
22,700 E 84,676 E

Thomas W. Stoelk -0- -0- 32,000 U 79,250 U
3,000 E 4,500 E

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The voting members of the Company's Compensation Committee consists of
Messrs. Aikman, Finkelson and Guill, none of whom are officers of the Company.

During 1995, the Company incurred costs of $145,000 with the Hawthorne
Company for advisory services paid in connection with the purchase of oil and
gas properties. Mr. Aikman, a director of the Company, is an executive officer
and a principal owner of the Hawthorne Company. The amount incurred was on a
basis similar to that paid by the Company to third parties for similar services
(See "Certain Transactions").

DIRECTOR COMPENSATION

Non-officer directors receive $3,750 per calendar quarter and are
reimbursed for expenses in attending Board of Directors and committee
meetings. Directors and members of committees of the Board of Directors who are
employees of the Company are not compensated for their Board of Directors and
committee activities. Mr. Edelman devotes only a limited portion of his time
to the Company. There is no written agreement between the Company and Mr.
Edelman.

OTHER COMPENSATORY ARRANGEMENTS
The Company maintains a Stock Option Plan which authorizes the grant of
options of up to 2.0 million shares of Common Stock. However, no new options may
be granted which would result in their being outstanding aggregate options
exceeding 10% of common shares outstanding plus those shares issuable under
convertible securities. Under the plan, incentive and non-qualified options may
be issued to officers, key employees and consultants. The plan is administered
by the Compensation Committee of the Board. All options issued under the plan
vest 30% after one year, 60% after two years and 100% after three years. During
the three months ended March 31, 1996, options covering 97,600 shares were
exercised at prices ranging from $3.38 to $8.25 per share. At March 31, 1996,
options covering a total of 1.2 million shares were outstanding under the plan,
of which 493,000 options were exercisable. The exercise prices of the
outstanding options range from $3.38 to $10.50.

In 1994, the stockholders approved the Directors Plan. Only Directors
who are not employees of the Company are eligible under the Directors Plan. The
Directors Plan covers a maximum of 200,000 shares. At March 31, 1996, 44,000
options were outstanding under the Directors Plan of which 3,600 were
exercisable as of that date. The exercise price of the options ranges from $7.75
to $8.00 per share.

In 1994, the stockholders approved the 1994 Stock Purchase Plan (the
"1994 Plan") which authorizes the sale of up to 500,000 shares of common stock
to officers, directors, key employees and consultants. Under the Plan, the right
to purchase shares at prices ranging from 50% to 85% of market value may be
granted. The Company had a 1989 Stock Purchase Plan (the "1989 Plan") which was
identical to the 1994 Plan except that it covered 333,333 shares. Upon adoption
of the 1994 Plan, the 1989 Plan was terminated. The plans are administered by
the Compensation Committee of the Board. During the three months ended March 31,
1996, the Company sold no unregistered common shares to officers and outside
directors. From inception of the 1989 Plan through March 31, 1996, a total of
388,000 unregistered shares had been sold, for a total consideration of
approximately $1.8 million at prices equal to 75% of market value at the time of
the sale.

EMPLOYEE BENEFIT PLANS

401(k) Plan. Effective January 1, 1989, the Company established a
401(k) plan. The plan permits employees to make contributions on a pre-tax
salary reduction basis. The Company makes discretionary contributions to the
plan. Company contributions for 1993, 1994 and 1995 were $189,000, $226,000 and
$346,000 respectively.

Group Medical and Long-Term Disability Insurance. The Company provides
a comprehensive major medical plan for all employees, inclusive of long-term
disability, group life and accidental death insurance. The Company presently
contributes a majority of the cost of the plan and requires employee
contributions based on individual or dependent coverage.

42
43

PRINCIPAL STOCKHOLDERS
AND SHARE OWNERSHIP OF MANAGEMENT

SECURITY OWNERSHIP

The following table sets forth certain information as of June 28, 1996
regarding (i) the share ownership of the Company by each person known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock or Preferred Stock of the Company, (ii) the share ownership of the
Company by each Director and each of the four Named Executive Officers (as
defined under "Executive Compensation-Summary Compensation Table") and (iii) the
share ownership by all Directors and executive officers of the Company, as a
group. The business address of each Officer and Director listed below is: c/o
Lomak Petroleum, Inc., 500 Throckmorton Street, Fort Worth, Texas 76102.

COMMON STOCK
------------
NUMBER OF SHARES
BENEFICIALLY PERCENT
OWNER OWNED OF CLASS
- ----------------- ---------------- --------

Thomas J. Edelman 916,446 (1) 6.2%
John H. Pinkerton 424,794 (2) 2.9%
C. Rand Michaels 226,829 (3) 1.5%
Robert E. Aikman 71,966 (4) 0.5%
Anthony V. Dub 64,165 (5) 0.4%
Allen Finkelson 31,047 (6) 0.2%
Ben A. Guill 27,400 (7) 0.2%
Chad L. Stephens 98,222 (8) 0.7%
Thomas W. Stoelk 14,500 (9) 0.1%
All Directors and executive
officers as a group (12 persons) 2,035,762 (10) 13.8%

Public Employees Retirement System of Ohio 1,350,000 (11) 9.2%
Guardian Life Insurance Company of America 503,432 (12) 3.3%
Fidelity Management & Research Company 366,132 (13) 2.4%
Palisade Capital 320,366 (14) 2.1%
Merrill Lynch Asset Management 240,274 (15) 1.6%
Pecks Management 228,834 (16) 1.5%
Cincinnati Financial 137,300 (17) 0.9%
Putnam Investments 137,300 (18) 0.9%

(see table footnotes on following page)

- -------------------

(1) Includes 75,000 shares which may be purchased under currently exercisable
options; 126,666 shares held under IRA, KEOGH and pension plan accounts;
29,916 shares owned by Mr. Edelman's spouse and 91,200 shares owned by Mr.
Edelman's minor children, to which Mr. Edelman disclaims beneficial
ownership.
(2) Includes 121,667 shares which may be purchased under currently exercisable
stock options; 133,959 shares held under IRA and pension plan accounts;
946 shares owned by Mr. Pinkerton's minor children and 743 shares owned by
Mr.Pinkerton's spouse, to which Mr. Pinkerton disclaims beneficial
ownership.
(3) Includes 1,804 shares held under the IRA account; 84,464 shares owned by
the spouse and 19,460 shares owned by the children of Mr. Michaels, to
which Mr. Michaels disclaims beneficial ownership, 35,666 shares which may
be purchased under currently exercisable stock options.
(4) Includes 15,000 shares which may be purchased under currently exercisable
stock options.
(5) Includes 2,400 shares which may be purchased under currently exercisable
stock options.
(6) Includes 6,000 shares which may be purchased under currently exercisable
options.
(7) Includes 2,400 shares which may be purchased under currently exercisable
options.
(8) Includes 36,167 shares which may be purchased under currently exercisable
stock options; 3,879 shares owned by Mr. Stephen's minor children and
10,000 shares owned by Mr. Stephen's spouse, to which Mr. Stephen's
disclaims beneficial ownership.
(9) Includes 13,500 shares which may be purchased under currently exercisable
stock options.
(10) Includes 403,799 shares which may be purchased under currently exercisable
stock options.
(11) Such person's address is 227 East Town Street, Columbus, Ohio 43215.
(12) Includes 503,432 shares issuable upon conversion of 191,304 shares of
$2.03 Preferred. Such person's address is 201 Park Avenue, New York,
New York 10003.
(13) Includes 366,132 shares issuable upon conversion of 139,130 shares of
$2.03 Preferred. Such person's address is 82 Devonshire, Boston,
Massachusetts 02110.
(14) Includes 320,366 shares issuable upon conversion of 121,739 shares of
$2.03 Preferred. Such person's address is One Bridge Plaza, Suite 695,
Fort Lee, New Jersey 07024.
(15) Includes 240,274 shares issuable upon conversion of 91,304 shares of
$2.03 Preferred. Such person's address is 800 Scuddersmill Road,
Plainsboro, New Jersey 08536.
(16) Includes 228,834 shares issuable upon conversion of 86,957 shares of
$2.03 Preferred. Such person's address is 1 Rockefeller Place, Suite
320, New York, New York 10020.
(17) Includes 137,300 shares issuable upon conversion of 52,174 shares of $2.03
Preferred. Such person's address is 6200 South Gilmore Road, Fairfield,
Ohio 45014.
(18) Includes 137,300 shares issuable upon conversion of 52,174 shares of
$2.03 Preferred. Such person's address is One Post Office Square,
Boston, Massachusetts 02109.

CERTAIN TRANSACTIONS
Mr. Edelman, Chairman of the Company, is also an executive officer and
shareholder of Snyder Oil Corporation ("SOCO"). At March 31, 1996, Mr. Edelman
owned 6.0% of the Company's common stock. In 1995, the Company acquired SOCO's
interest in certain wells located in Appalachia for $4 million. The price was
determined based on arms-length negotiations through a third-party broker
retained by SOCO. Subsequent to the transaction, the Company and SOCO no longer
hold interests in any of the same properties.

During 1994 and 1995, the Company incurred fees of $369,000 and
$145,000, respectively, to the Hawthorne Company in connection with
acquisitions. Mr. Aikman, a director of the Company, is an executive officer and
a principal owner of the Hawthorne Company. The fees were consistent with those
paid by the Company to third parties for similar services.

SELLING SECURITYHOLDERS

The Selling Securityholders have advised the Company that sales of the
Selling Securityholder Securities may be effected from time to time in
transactions (which may include block transactions) in the over-the-counter
market, in negotiated transactions, through the writing of options on the
Selling Securityholder Securities or a combination of such methods of sale, at
fixed prices that may be changed, at market prices prevailing at the time of
sale, or at negotiated prices. The Selling Securityholders may effect such
transactions by selling the Selling Securityholder Securities directly to
purchasers or through broker-dealers that may act as agents or principals. Such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Securityholders and/or the purchasers of Selling
Securityholder Securities for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The Selling
Securityholders have not entered into any agreement with respect to the sale of
the Selling Securityholder Securities.

The Selling Securityholders and any broker-dealers that act in
connection with the sale of the Selling Securityholder Securities as principals
may be deemed to be "underwriters" within the meaning of Section 2(11) of the
Act and any commission received by them and any profit on the resale of the
Selling Securityholder Securities and/or principals might be deemed to be
underwriting discounts and commissions under the Act. The Selling
Securityholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the Selling Securityholder
Securities against certain liabilities, including liabilities arising under the
Act. Sales of the Selling Securityholder Securities by the Selling
Securityholders, or even the potential of such sales, could have an adverse
effect on the market price of the Common Stock.

No arrangements have been made for the distribution or sale of the
Selling Securityholder Securities. There can be no assurance that Selling
Securityholders will be able to sell some or all of the Selling Securityholder
Securities listed for sale herein. There is no established public trading market
for the Preferred Stock as of the date of this Prospectus.

The following table sets forth certain information with respect to the
Selling Securityholders for whom the Company is registering the Selling
Securityholder Securities for resale to the public. The Company will not receive
any of the proceeds from the sale of the Selling Securityholder Securities.
There are no material relationships between any of the Selling Securityholders
and the Company except as otherwise indicated. Beneficial ownership of the
Selling Securityholder Securities by each Selling Securityholder after the sale
will depend on the number of Selling Securityholder Securities sold by each
Selling Securityholder. The shares offered by the Selling Securityholder are not
being underwritten. The Common Stock issuable upon conversion of the Preferred
Stock is being offered directly by the Company pursuant to the terms of the
Preferred Stock and is being hereby registered.

Common Stock
Name Beneficially Percent of
of Owned Prior to Class of Common
Selling Securityholder Offering Stock
---------------------------------- -------------- ---------------
Donald & Company 40,000 (1) (2)

(1) Represents currently exercisable warrants to purchase shares at
$7.50 per share which expire in December 1996.
(2) Less than 1%.
45

DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of (i) 4,000,000
shares of Serial Preferred Stock, $1.00 par value, and (ii) 35,000,000 shares of
Common Stock, $.01 par value. As of June 28, 1996, the Company had outstanding
14,696,114 shares of Common Stock and 1,150,000 shares of Preferred Stock.

COMMON STOCK
Subject to any prior rights of the Preferred Stock, the holders of
Common Stock: (1) are entitled to such dividends as may be declared by the Board
of Directors from time to time out of funds legally available for such payments
(however the Credit Agreement limits the payment of dividends to 75% of the
Company's net income in any one year); (2) are entitled to one vote per share;
(3) have no preemptive or conversion rights and are not subject to redemption;
and (4) are entitled upon liquidation to receive ratably the assets remaining
after the payment of corporate debts and the satisfaction of the liquidation
preference of any preferred stock. If there is any arrearage in the payment of
dividends on any preferred stock, the Company may not pay dividends upon,
repurchase or redeem shares of its Common Stock. Voting is non-cumulative. The
outstanding shares of Common Stock are fully paid and non-assessable.

OPTIONS
The Company's stock option plan, which is administered by the
Compensation Committee, provides for the granting of options to purchase shares
of Common Stock to key employees and certain other persons who are not employees
for advice or other assistance or services to the Company. The plan permits the
granting of options to acquire up to 2.0 million shares of Common Stock subject
to a limitation of 10% of the outstanding Common Stock on a fully diluted basis.
At March 31, 1996 a total of 1.2 million options had been granted under the plan
of which 493,000 shares were exercisable at that date. The options outstanding
at March 31, 1996 were granted at an exercise price of $3.38 to $10.50 per
share. The exercise price of all such options was equal to the fair market value
of the Common Stock on the date of grant. All were options granted for a term of
five years, with 30% of the options becoming exercisable after one year, an
additional 30% becoming exercisable after two years and the remaining options
becoming exercisable after three years.

In 1994, the stockholders approved the 1994 Plan which authorizes the
sale of up to 500,000 shares of common stock to officers, directors, key
employees and consultants. Under the 1994 Plan, the right to purchase shares at
prices ranging from 50% to 85% of market value may be granted. The Company had a
1989 Plan which was identical to the 1994 Plan except that it covered 333,333
shares. Upon adoption of the 1994 Plan, the 1989 Plan was terminated. The plans
are administered by the Compensation Committee of the Board. From inception of
the 1989 Plan through March 31, 1996, a total of 388,000 unregistered shares had
been sold, for a total consideration of approximately $1.8 million at prices
equal to 75% of market value at the time of the sale.

WARRANTS
Warrants to acquire 40,000 shares of common stock were outstanding at
March 31, 1996. The warrants have an exercise price of $7.50 per share and
expire in December 1996. Warrants to acquire 20,000 shares of common stock at an
exercise price of $12.88 were issued on May 22, 1996. These warrants expire on
December 31, 1997.

PREFERRED STOCK
The Board of Directors of the Company, without action by stockholders,
is authorized to issue shares of serial preferred stock in one or more series
and, within certain limitations, to determine the voting rights (including the
right to vote as a series on particular matters), preferences as to dividends
and the liquidation, conversion, redemption and other rights of each such
series. The Board of Directors could issue a series with rights more favorable
with respect to dividends, liquidation and voting than those held by the holders
of its Common Stock. At June 1, 1996, 1,150,000 shares of $2.03 Convertible
Preferred Stock were outstanding.

The $2.03 Convertible Preferred Stock outstanding preferred stock bears
an annual dividend rate of $2.03 payable quarterly. If dividends have not been
paid on the $2.03 Convertible Preferred Stock, the Company cannot redeem or pay
dividends on shares of stock ranking junior to the preferred stock. The $2.03
Convertible Preferred Stock ranks senior in right of payment of dividends and
upon liquidation to the Common Stock. Subject to certain limitations, the $2.03
Convertible Preferred Stock ranks pari passu in right of payment of dividends
with any convertible preferred stock hereafter issued by the Company and
subordinate to any non-convertible preferred stock issued by the Company. In
addition, the holders of the preferred stock are entitled to one vote for each
share owned. The holders may elect one-third of the Board of Directors if
dividends remain unpaid for six full quarterly periods. The $2.03 Convertible
Preferred Stock has liquidation rights of $25 per share. The Company may
exchange the $2.03 Convertible Preferred Stock for 8.125% Convertible
Subordinated Notes due 2005. Each share of $2.03 Convertible Preferred Stock is
convertible into 2.63 shares of the Common Stock, subject to adjustment under
certain circumstances. Beginning November 1, 1998, the Company may redeem, in
whole or part, at prices declining from $26.25 to $25.00 per share, plus
cumulative unpaid dividends through the date of repurchase.

TRANSFER AGENT

The transfer agent and registrar for the Common Stock is KeyCorp.

SHARES ELIGIBLE FOR FUTURE SALE

There are reserved for issuance an aggregate of 4,846,410 shares upon
exercise of outstanding warrants and options and the conversion of outstanding
preferred stock. Of such shares, 258,133 when issued, will be "restricted
securities" within the meaning of Rule 144 under the Securities Act and will be
owned by Thomas J. Edelman, John H. Pinkerton, C. Rand Michaels, Robert E.
Aikman, Anthony V. Dub, Allen Finkelson and Ben A. Guill, deemed to be
affiliates of the Company for the purposes of this computation.

In general, under Rule 144, as currently in effect, a person (or
persons whose shares are aggregated), including a person who may be deemed to be
an "affiliate" of the Company as that term is defined under the Securities Act,
will be entitled to sell within any three-month period a number of shares
beneficially owned for at least two years that does not exceed the greater of
(i) one percent (1%) of the then outstanding shares of Common Stock, or (ii) the
average weekly trading volume in the Common Stock during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain
requirements as to the manner of sale, notice and the availability of current
public information about the Company. However, a person who is not deemed to
have been an affiliate of the Company during the 90 days preceding a sale by
such person, and who has beneficially owned shares of Common Stock for at least
three years, may sell such shares without regard to the volume, manner of sale
or notice requirements of Rule 144.

The Company cannot predict the effect, if any, that sales of Common
Stock pursuant to Rule 144 or otherwise, or the availability of such shares for
sale, will have on the market price prevailing from time to time. Nevertheless,
sales under Rule 144 of substantial amounts of Common Stock in the public market
could adversely affect prevailing market prices for the Common Stock.

47
48

LEGAL OPINIONS

Certain legal matters related to the shares of Common Stock offered
hereby are being passed upon for the Company by Rubin Baum Levin Constant &
Friedman, New York, New York. Walter M. Epstein, Of Counsel to Rubin Baum Levin
Constant & Friedman, currently owns 4,848 shares of Common Stock.

EXPERTS

The Consolidated Financial Statements of the Company, as of December
31, 1994 and 1995 and for each of the two years then ended, included in this
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as stated in their reports appearing herein. The
Consolidated Financial Statements of the Company for the year ended December 31,
1993, have been audited by Ernst & Young LLP, independent auditors, to the
extent indicated in their report. The statement of assets (other than productive
oil and gas properties) and liabilities of the Bannon Interests as of December
31, 1995 and the related statement of revenues and direct operating expenses for
the year then ended have been included herein and in the registration statement
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing. Such financial statements have been
included herein in reliance upon such reports given upon the authority of such
firms as experts in accounting and auditing.

48
49

GLOSSARY
The terms defined in this glossary are used throughout this Prospectus.

BBL. One stock tank barrel, or 42 U.S. gallons liquid volume, used herein
in reference to crude oil or other liquid hydrocarbons.

BCF. On billion cubic feet.

BCFE. On billion cubic feet of gas equivalent.

BEHIND PIPE. Hydrocarbons in a potentially producing horizon penetrated by a
well bore the production of which has been postponed pending the production of
hydrocarbons from another formation penetrated by the well bore. These
hydrocarbons are classified as proved but non-producing reserves.

BOE. Barrels of oil equivalent (converting six Mcf of natural gas to one Bbl
of oil).

DEVELOPMENT WELL. A well drilled within the proved area of an oil or natural gas
reservoir to the depth of a stratigraphic horizon known to be productive.

DRY HOLE. A well found to be incapable of producing either oil or natural gas in
sufficient quantities to justify completion as an oil or gas well.

EXPLORATORY WELL. A well drilled to find and produce oil or gas as in an
unproved area, to find a new reservoir in a field previously found to be
productive of oil or gas in another reservoir, or to extend a known reservoir.

GROSS ACRES OR GROSS WELLS. The total acres or wells, as the case may be, in
which a working interest is owned.

INFILL WELL. A well drilled between known producing wells to better exploit the
reservoir.

MBBL. One thousand barrels of crude oil or other liquid hydrocarbons.

MBOE. One thousand barrels of oil equivalent.

MCF. One thousand cubic feet.

MMBBL. One million barrels of crude oil or other liquid hydrocarbons.

MMBOE. One million barrels of oil equivalent.

MMCF. One million cubic feet.

MMCFE. One million cubic feet of gas equivalent.

NET OIL AND GAS SALES. Oil and natural gas sales less oil and natural gas
production expenses.

PRESENT VALUE OF PROVED RESERVES. The present value of proved reserves is an
estimate of future net cash flows from each of the properties at December 31,
1995, or as otherwise indicated, after deducting production and ad valorem
taxes, future capital costs and operating expenses, but before deducting federal
income taxes. The future net revenues have been discounted at an annual rate of
10% to determine their "present value." The present value is shown to indicate
the effect of time on the value of the revenue stream and should not be
construed as being the fair market value of the properties. Estimates have been
made using constant oil and gas prices and operating costs, at December 31,
1995, or as otherwise indicated.

PRIMARY PRODUCTION. Production from a reservoir primarily by natural energy in
the reservoir with little loss of pressure and with most wells still flowing.

49
50

PRODUCTIVE WELL. A well that is producing oil or gas or that is capable of
production.

PROVED DEVELOPED NON-PRODUCING RESERVES. Reserves that consist of (i) proved
reserves from wells which have been completed and tested but are not producing
due to lack of market or minor completion problems which are expected to be
corrected and (ii) proved reserves currently behind the pipe in existing wells
and which are expected to be productive due to both the well log characteristics
and analogous production in the immediate vicinity of the wells.

PROVED DEVELOPED PRODUCING RESERVES. Proved reserves that can be expected to be
recovered from currently producing zones under the continuation of present
operating methods.

PROVED DEVELOPED RESERVES. Proved reserves that can be expected to be recovered
through existing wells with existing equipment and operating methods.

PROVED RESERVES. The estimated quantities of crude oil, natural gas and natural
gas liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions.

PROVED UNDEVELOPED RESERVES. Proved reserves that are expected to be recovered
from new wells on undrilled acreage, or from existing wells where a relatively
major expenditure is required for recompletion.

RECOMPLETION. The completion for production of an existing wellbore in
another formation from that in which the well has previously been completed.

ROYALTY INTEREST. An interest in an oil and gas property entitling the owner to
a share of oil and natural gas production free of costs of production.

WORKING INTEREST. The operating interest that gives the owner the right to
drill, produce and conduct operating activities on the property and a share of
production, subject to all royalties, overriding royalties and other burdens and
to all costs of exploration, development and operations and all risks in
connection therewith.

50
51

LOMAK PETROLEUM, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED)

Pro forma combined statement of income for the year ended December 31, 1995 F-3
Pro forma combined statement of income for the three months ended March 31, 1996 F-4
Pro forma combined balance sheet at March 31, 1996 F-5
Notes to pro forma combined financial statements F-6

LOMAK PETROLEUM, INC.:

Report of Independent Public Accountants F-7
Consolidated balance sheets at December 31, 1994 and 1995 F-9
Consolidated statement of income for the years ended December 31, 1993, 1994 and 1995 F-10
Consolidated statement of stockholders' equity for the years ended December 31, 1993, 1994 and 1995 F-11
Consolidated statement of cash flows for the years ended December 31, 1993, 1994 and 1995 F-12
Notes to consolidated financial statements F-13

Consolidated balance sheets at December 31, 1995 and March 31, 1996 F-26
Consolidated statement of income for the three months ended March 31, 1995 and 1996 F-27
Consolidated statement of cash flows for the three months ended March 31, 1995 and 1996 F-28
Notes to consolidated financial statements F-29

BANNON INTERESTS:

Report of Independent Public Accountants F-39
Statements of Assets (other than productive oil and gas properties) and liabilities at December 31, 1995
and March 31, 1996 (unaudited) F-40
Statements of Revenues and Direct Operating Expenses for the year ended December 31, 1995 and the
three months ended March 31, 1996 unaudited) F-41
Notes to Statements of Assets (other than productive oil and gas properties) and liabilities and
Statements of Revenues and Direct Operating Expenses F-42

All other schedules have been omitted since the required information is
not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the financial statements.

F-1
52

PRO FORMA COMBINED FINANCIAL STATEMENTS
WITH RESPECT TO THE TRANSACTIONS

The accompanying unaudited pro forma combined statement of income gives
effect to: (i) the purchase by the Company of certain oil and gas properties
from a subsidiary of Parker & Parsley Petroleum Co., (ii) the purchase by the
Company of certain oil and gas properties from Transfuel, Inc. ("Transfuel") and
(iii) the purchase by the Company of certain oil and gas properties from Bannon
Energy Incorporated ("Bannon") (collectively referred to as the "Acquisitions").
The unaudited pro forma combined financial statements also give effect to the
private placement of Convertible Exchangeable Preferred Stock and Common Stock
(the "Private Placements") and the application of the estimated net proceeds
therefrom. The unaudited pro forma combined statement of income for the year
ended December 31, 1995 was prepared as if all transactions had occurred on
January 1, 1995. The unaudited pro forma combined statement of income for the
three months ended March 31, 1996 was prepared as if all transactions had
occurred on January 1, 1996. The accompanying unaudited pro forma combined
balance sheet of the Company as of March 31, 1996 has been prepared as if all
transactions had occurred as of that date. The historical information provided
in the statements of income for the year ended December 31, 1995 and for the
three months ended March 31, 1996, represents the following periods for the
various acquisitions: (i) Parker & Parsley represents the period from January 1,
1995 through July 31, 1995, (ii) Transfuel represents the period from January 1,
1995 through September 30, 1995, (iii) Bannon represents the periods from
January 1, 1995 through December 31, 1995 and from January 1, 1996 through March
31, 1996.

This information is not necessarily indicative of future combined
operations and it should be read in conjunction with the separate historical
statements and related notes of the respective entities appearing elsewhere in
this filing or incorporated by reference herein.

F-2

LOMAK PETROLEUM, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)

Parker &
Lomak Parsley Transfuel Bannon
------------ ------------ ------------ ------------
Historical Historical Pro Forma
Historical Seven Months Nine Months Historical Adjustments for the
Year Ended Ended Ended Year Ended Acquisitions and the
December 31, July 31, September 30, December 31, Private Placements Pro Forma
1995 1995 1995 1995 (Note 1) Combined
------------ ------------ ------------ ------------ ------------------ --------------

Revenues
Oil and gas sales $37,417,204 $3,377,129 $6,926,172 $7,246,000 $ - $54,966,505
Field services 10,096,531 - - - - 10,096,531
Gas marketing and transportation 3,284,399 - - - - 3,284,399
Interest and other 1,316,789 - - - - 1,316,789
----------- ----------- ----------- ----------- ----------- ----------
52,114,923 3,377,129 6,926,172 7,246,000 - 69,664,224
----------- ----------- ----------- ----------- ----------- ----------
Expenses
Direct operating 14,930,020 1,481,325 2,696,825 3,177,000 (1,300,000) (d) 20,985,170
Field services 6,469,014 - - - - 6,469,014
Gas marketing and transportation 848,644 - - - - 848,644
Exploration 511,535 - - - - 511,535
General and administrative 2,736,546 - - - 137,819 (c,d) 2,874,365
Interest 5,583,528 - - - 2,337,698 (a) 7,921,226
Depletion, depreciation and
amortization 14,863,527 - - - 6,779,832 (b) 21,643,359
----------- ----------- ----------- ----------- ----------- ----------
45,942,814 1,481,325 2,696,825 3,177,000 7,955,349 61,253,313
----------- ----------- ----------- ----------- ----------- ----------

Income (loss) before income taxes 6,172,109 1,895,804 4,229,347 4,069,000 (7,955,349) 8,410,911

Income taxes
Current (85,413) - - - (208,970) (e) (294,383)
Deferred (1,696,275) - - - (154,125) (e) (1,850,400)
----------- ----------- ----------- ----------- ----------- ----------
Income (loss) from continuing
operations $ 4,390,421 $ 1,895,804 $ 4,229,347 $ 4,069,000 ($8,318,444) $6,266,128
=========== =========== =========== =========== =========== ==========
Income from continuing operations
applicable to common shares $ 3,659,669 $4,465,615
=========== ==========
Net income per common share $0.31 $ 0.36
=========== ==========

Weighted average shares outstanding 11,840,804 409,784 12,250,588
=========== ==========

See notes to pro forma combined financial statements.

F-3

LOMAK PETROLEUM, INC.
PRO FORMA COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)

Lomak Bannon
-------------- --------------
Historical Historical Pro Forma
Three Three Adjustments for the
Months Ended Months Ended Acquisitions and the
March 31, March 31, Private Placements Pro Forma
1996 1996 (Note 2) Combined
-------------- -------------- ------------------ --------------

Revenues
Oil and gas sales $ 16,088,249 $ 1,703,000 $ - $17,791,249
Field services 3,299,259 - - 3,299,259
Gas marketing and transportation 1,028,198 - - 1,028,198
Interest and other 97,064 - - 97,064
------------- ------------ ----------- -----------
20,512,770 1,703,000 - 22,215,770
------------- ------------ ----------- -----------
Expenses
Direct operating 5,757,676 562,000 - 6,319,676
Field services 2,528,849 - - 2,528,849
Gas marketing and transportation 290,119 - - 290,119
Exploration 179,822 - - 179,822
General and administrative 918,092 - 37,500 (h) 955,592
Interest 1,554,077 - 581,777 (f) 2,135,854
Depletion, depreciation and
amortization 5,278,112 - 601,137 (g) 5,879,249
------------- ------------ ----------- -----------
16,506,747 562,000 1,220,414 18,289,161
------------- ------------ ----------- -----------

Income (loss) before income taxes 4,006,023 1,141,000 (1,220,414) 3,926,609

Income taxes
Current (80,200) - 1,668 (i) (78,532)
Deferred (1,322,500) - 26,719 (i) (1,295,781)
------------- ------------ ----------- -----------
Income (loss) from continuing
operations $ 2,603,323 $ 1,141,000 ($1,192,027) $ 2,552,296
============= ============ =========== ===========

Income from continuing operations
applicable to common shares $ 1,926,123 $ 1,875,096
============= ===========

Net income per common share $0.14 $ 0.14
============= ===========

Weighted average shares outstanding 13,691,375 13,691,375
============= ===========

See notes to pro forma combined financial statements.

F-4
55

LOMAK PETROLEUM, INC.
PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)

Lomak
--------------
Pro Forma
Adjustments for
Historical the Bannon
March 31, Acquisition Pro Forma
1996 (Note 2) Combined
-------------- ----------------- --------------

ASSETS
Current assets
Cash and equivalents $651,463 $ - $651,463
Accounts receivable 19,234,122 551,000 (j) 19,785,122
Inventory and other 1,289,888 - 1,289,888
-------------- ----------------- --------------

Total current assets 21,175,473 - 21,726,473
-------------- ----------------- --------------

Oil and gas properties 229,595,373 35,454,000 (j) 265,049,373
Accumulated depletion and amortization (38,103,804) - (38,103,804)
-------------- ----------------- --------------

191,491,569 35,454,000 226,945,569
-------------- ----------------- --------------

Gas transportation and field service assets 23,744,495 - 23,744,495
Accumulated depreciation (4,204,794) - (4,204,794)
-------------- ----------------- --------------

19,539,701 - 19,539,701
-------------- ----------------- --------------

$232,206,743 $ 36,005,000 $268,211,743
============== ================= ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $9,617,925 $ - $9,617,925
Accrued liabilities 5,932,754 105,000 (j) 6,037,754
Accrued payroll and benefit costs 1,346,282 - 1,346,282
Current portion of debt 25,784 - 25,784
-------------- ----------------- --------------

Total current liabilities 16,922,745 105,000 17,027,745
-------------- ----------------- --------------

Long-term debt 95,090,000 35,900,000 (j) 130,990,000

Deferred income taxes 19,048,365 - 19,048,365

Stockholders' equity
7-1/2% Preferred stock, $1 par 200,000 - 200,000
$2.03 Preferred stock, $1 par 1,150,000 - 1,150,000
Common stock, $.01 par 134,022 - 134,022
Capital in excess of par value 101,880,541 - 101,880,541
Retained earnings (deficit) (2,218,930) - (2,218,930)
-------------- ----------------- --------------

Total stockholders' equity 101,145,633 - 101,145,633
-------------- ----------------- --------------
$232,206,743 $ 36,005,000 $268,211,743
============== ================= ==============

See notes to pro forma combined financial statements.

F-5

LOMAK PETROLEUM, INC.
NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE (1) PRO FORMA ADJUSTMENTS FOR THE ACQUISITIONS AND THE PRIVATE PLACEMENTS
- -- FOR THE YEAR ENDED DECEMBER 31, 1995

The accompanying unaudited pro forma combined statement of income for the
year ended December 31, 1995 has been prepared as if the Acquisitions and the
Private Placements had occurred on January 1, 1995 and reflects the following
adjustments:

(a) To adjust interest expense for the estimated amounts that would have been
incurred on the incremental borrowings for the Acquisitions and for the
estimated amounts that would have been repaid with the net proceeds from the
Private Placements.

(b) To record depletion expense for the Acquisitions at a rate of $4.31 per
Boe and to adjust the historical depletion rate for Lomak from $4.36 to $4.31
per Boe.

(d) To adjust historical oil and gas production and general and administrative
expenses for cost reductions and increases due to integration of the
Acquisitions.

(e) To adjust the provision for income taxes for the change in taxable income
resulting from the Acquisitions and the effect on deferred taxes recorded at
January 1, 1995 had the acquisitions taken place at that time.

NOTE (2) PRO FORMA ADJUSTMENTS FOR THE BANNON ACQUISITION -- FOR THE THREE
MONTHS ENDED MARCH 31, 1996

The accompanying unaudited pro forma combined statement of income for the
three months ended March 31, 1996 has been prepared as if the Bannon acquisition
had occurred on January 1, 1996 and reflects the following adjustments:

(f) To adjust interest expense for the estimated amount that would have been
incurred on the incremental borrowings for the Bannon acquisition.

(g) To record depletion expense for the Bannon acquisition at a rate of $4.31
per Boe and to adjust the historical depletion rate for Lomak from $4.36 to
$4.31 per Boe.

(h) To adjust historical general and administrative expenses for cost increases
due to integration of the Bannon acquisition.

(i) To adjust the provision for income taxes for the change in taxable income
resulting from the Bannon acquisition and the effect on deferred taxes recorded
at January 1, 1996 had the acquisitions taken place at that time.

NOTE (3) PRO FORMA ADJUSTMENTS FOR THE BANNON ACQUISITION -- AS OF MARCH 31,
1996

(j) To record the purchase of Bannon's oil and gas properties.

F-6

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

THE BOARD OF DIRECTORS AND STOCKHOLDERS
LOMAK PETROLEUM, INC.

We have audited the accompanying consolidated balance sheets of Lomak
Petroleum, Inc. (a Delaware corporation) as of December 31, 1994 and 1995, and
the related consolidated statements of income, stockholders' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Lomak Petroleum,
Inc. as of December 31, 1994 and 1995, and the results of its operations and its
cash flows for the years then ended, in conformity with generally accepted
accounting principles.

ARTHUR ANDERSEN LLP

Cleveland, Ohio,
February 27, 1996

F-7
58

REPORT OF INDEPENDENT AUDITORS

THE BOARD OF DIRECTORS AND STOCKHOLDERS
LOMAK PETROLEUM, INC.

We have audited the consolidated statements of income, stockholders'
equity and cash flows of Lomak Petroleum, Inc. for the year ended December 31,
1993. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements of Lomak Petroleum, Inc.
referred to above present fairly, in all material respects, the consolidated
results of its operations and its cash flows for the year ended December 31,
1993, in conformity with generally accepted accounting principles.

As discussed in Note 10 to the consolidated financial statements, in
1993 the Company changed its method of accounting for income taxes.

ERNST & YOUNG LLP

Cleveland, Ohio
March 8, 1994

F-8
59

LOMAK PETROLEUM, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

December 31,
-------------------------------
1994 1995
------------- -------------

ASSETS
Current assets
Cash and equivalents.......................................... $ 4,897 $ 3,047
Accounts receivable........................................... 9,431 14,938
Inventory and other........................................... 1,592 1,114
-------- --------
15,920 19,099
-------- --------

Oil and gas properties, successful efforts method............. 133,373 210,073
Accumulated depletion.......................................... (20,409) (33,371)
-------- --------
112,964 176,702
-------- --------

Gas transportation and field service assets................... 16,125 23,167
Accumulated depreciation....................................... (3,241) (4,304)
-------- --------
12,884 18,863
-------- --------
$141,768 $214,664
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable.............................................. $ 8,421 $ 9,084
Accrued liabilities........................................... 4,715 3,761
Accrued payroll and benefit costs............................. 1,075 1,762
Current portion of debt (Note 5).............................. 707 53
-------- --------
14,918 14,660
-------- --------

Long-term debt (Note 5)....................................... 61,885 83,035

Deferred taxes (Note 10)...................................... 16,390 17,726

Commitments and contingencies (Note 6)........................

Minority interest............................................. 5,327 -

Stockholders' equity (Notes 7 and 8)
Preferred stock, $1 par, 2,000,000 shares authorized,
7-1/2% convertible preferred, 200,000 issued
(liquidation preference $5,000,000)....................... 200 200
$2.03 convertible preferred, 1,150,000 issued
(liquidation preference $28,750,000)...................... - 1,150
Common stock, $.01 par, 20,000,000 shares authorized,
9,754,010 and 13,322,738 issued........................... 97 133
Capital in excess of par value................................ 50,495 101,773
Retained earnings (deficit)................................... (7,544) (4,013)
-------- --------
43,248 99,243
-------- --------
$141,768 $214,664
======== ========

SEE ACCOMPANYING NOTES.

F-9
60

LOMAK PETROLEUM, INC.

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Year Ended December 31,
--------------------------------------------------
1993 1994 1995
------------- ------------- -------------

Revenues
Oil and gas sales........................... $ 11,132 $ 24,461 $ 37,417
Field services.............................. 6,966 7,667 10,097
Gas transportation and marketing............ 559 2,195 3,284
Interest and other.......................... 418 471 1,317
---------- --------- ---------
19,075 34,794 52,115
---------- --------- ---------

Expenses
Direct operating............................ 4,438 10,019 14,930
Field services.............................. 5,712 5,778 6,469
Gas transportation and marketing............ 13 490 849
Exploration................................. 86 359 512
General and administrative.................. 2,049 2,478 2,736
Interest.................................... 1,120 2,807 5,584
Depletion, depreciation and amortization.. 4,347 10,105 14,863
---------- --------- ---------
17,765 32,036 45,943
---------- --------- ---------

Income before taxes......................... 1,310 2,758 6,172

Income taxes
Current..................................... 69 21 86
Deferred.................................... (150) 118 1,696
---------- --------- ---------
(81) 139 1,782
---------- --------- ---------
Net income.................................. $ 1,391 $ 2,619 $ 4,390
========== ========= =========
Net income applicable to
common shares........................... $ 1,062 $ 2,244 $ 3,659
========== ========= =========

Earnings per common share................... $ 0.18 $ 0.25 $ 0.31
========== ========= =========

Weighted average shares outstanding......... 5,853 9,051 11,841
========== ========= =========

SEE ACCOMPANYING NOTES.

F-1O
61

LOMAK PETROLEUM, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

Preferred Stock Common Stock
-------------------------- ---------------------------- Capital in Retained
Par Par Excess of Earnings
Shares Value Shares Value Par Value (Deficit)
------------ ----------- ------------ ----------- ------------- --------------

Balance, December 31, 1992.... 33 $ 33 4,776 $ 48 $ 20,274 $ (10,850)

Preferred dividends.......... - - - - - (329)
Common issued................ - - 2,772 28 17,032 -
Common repurchased........... - - (41) (1) (202) -
7-1/2% preferred issued...... 200 200 - - 4,639 -
Conversion of 8% preferred... (33) (33) 802 8 25 -
Net income................... - - - - - 1,391
---------- ---------- ---------- ---------- ---------- ----------

Balance, December 31, 1993.... 200 200 8,309 83 41,768 (9,788)

Preferred dividends.......... - - - - - (375)
Common issued................ - - 1,504 15 9,220 -
Common repurchased........... - - (59) (1) (493) -
Net income................... - - - - - 2,619
---------- ---------- ---------- ---------- ---------- ----------

Balance, December 31, 1994.... 200 200 9,754 97 50,495 (7,544)

Preferred dividends.......... - - - - - (731)
Common dividends............. - - - - - (128)
Common issued................ - - 3,609 36 24,953 -
Common repurchased........... - - (40) - (332) -
$2.03 preferred issued....... 1,150 1,150 - - 26,657 -
Net income................... - - - - - 4,390
---------- ---------- ---------- ---------- ---------- ----------

Balance, December 31, 1995.... 1,350 $ 1,350 13,323 $ 133 101,773 $ (4,013)
========== ========== ========== ========== ========== ==========

SEE ACCOMPANYING NOTES.

F-11

LOMAK PETROLEUM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

Year Ended December 31,
------------------------------------------------------
1993 1994 1995
--------------- --------------- ---------------

Cash flows from operations
Net income......................................... $ 1,391 $ 2,619 $ 4,390
Adjustments to reconcile net income to
net cash provided by operations:
Depletion, depreciation and amortization........... 4,347 10,105 14,863
Deferred income taxes.............................. (150) 118 1,335
Changes in working capital net of effects
of purchases of businesses:
Accounts receivable................................ 1,534) 2,572 (5,543)
Inventory and other................................ (334) (45) 278
Accounts payable................................... (1,022) (2,126) 663
Accrued liabilities and payroll and benefit costs 1,928 (1,531) 1,778
Gain on sale of assets and other.................. (321) (471) (1,203)
--------- --------- ---------

Net cash provided by operations.................... 4,305 11,241 16,561

Cash flows from investing:
Acquisition of businesses, net of cash............. (27,607) (9,399) -
Oil and gas properties............................. (15,219) (22,251) (69,992)
Additions to property and equipment................ (1,237) (813) (9,102)
Proceeds on sale of assets......................... 604 2,927 2,981
--------- --------- ---------
Net cash used in investing......................... (43,459) (29,536) (76,113)

Cash flows from financing:
Proceeds from indebtedness......................... 20,275 22,235 21,304
Repayments of indebtedness......................... (1,045) (1,024) (808)
Preferred stock dividends.......................... (329) (375) (731)
Common stock dividends............................. - - (128)
Proceeds from common stock issuance................ 15,385 830 10,590
Repurchase of common stock......................... (207) (493) (332)
Proceeds from preferred stock issuance............. 4,833 - 27,807
--------- --------- ---------

Net cash provided by financing..................... 38,912 21,173 57,702
--------- --------- ---------

Change in cash..................................... (242) 2,878 (1,850)

Cash and equivalents at beginning of period........ 2,261 2,019 4,897
--------- --------- ---------

Cash and equivalents at end of period.............. $ 2,019 $ 4,897 $ 3,047
========= ======== =========

SEE ACCOMPANYING NOTES.

F-12
63

LOMAK PETROLEUM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION AND NATURE OF BUSINESS

Lomak Petroleum, Inc. ("Lomak" or the "Company") is an independent oil
and gas company engaged in the acquisition, development, exploration and
enhancement of oil and gas properties in the United States. Lomak's core areas
of operation are located in Texas, Oklahoma and Appalachia. The Company has
grown through a combination of acquisition, development, exploration and
enhancement activities. Since January 1, 1990, 60 acquisitions have been
consummated at a total cost of approximately $200 million and approximately $24
million has been expended on development and exploration activities. As a
result, proved reserves and production have each grown during this period at a
rate in excess of 80% per annum. At December 31, 1995, proved reserves totaled
298 Bcfe, having a pre-tax present value at constant prices on that date of $229
million and a reserve life of nearly 12 years.

Lomak's acquisition effort is focused on properties with prices of less
than $30 million within its core areas of operation. Management believes these
purchases are less competitive than those involving larger property interests.
To the extent purchases continue to be made primarily within existing core
areas, efficiencies in operations, drilling, gas marketing and administration
should be realized. In 1994, Lomak initiated a program to exploit its inventory
of over 500 development projects. In the future, Lomak expects its growth to be
driven principally by a combination of acquisitions and development and, to a
lesser extent, exploration.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying financial statements include the accounts of the
Company, all majority owned subsidiaries and its pro rata share of the assets,
liabilities, income and expenses of certain oil and gas properties. Temporary
investments with an initial maturity of ninety days or less are considered cash
equivalents.

OIL AND GAS PROPERTIES

The Company follows the successful efforts method of accounting for oil
and gas properties. Exploratory costs which result in the discovery of reserves
and the cost of development wells are capitalized. Geological and geophysical
costs, delay rentals and costs to drill unsuccessful exploratory wells are
expensed. Depletion is provided on the unit-of-production method. Oil is
converted to Mcfe at the rate of six Mcf per barrel. The depletion rates per
Mcfe were $.74, $.74 and $.73 in 1993, 1994 and 1995, respectively.
Approximately $5.3 million, $12.9 million and $12.2 million of oil and gas
properties were classified as proved undeveloped or unproved and, therefore, not
subject to depletion as of December 31, 1993, 1994 and 1995, respectively. These
costs are assessed periodically to determine whether their value has been
impaired, and if impairment is indicated, the excess costs are charged to
expense.

GAS TRANSPORTATION AND FIELD SERVICE ASSETS

The Company owns and operates approximately 1,900 miles of gas
gathering lines in proximity to its principal gas properties. Depreciation is
calculated on the straight-line method based on estimated useful lives ranging
from four to fifteen years.

The Company receives fees for providing field related services. These
fees are recognized as earned. Depreciation is calculated on the straight-line
method based on estimated useful lives ranging from one to six years, except for
buildings which are being depreciated over ten to twenty-five year periods.

F-13
64

In September 1994, the Company sold substantially all of its brine
disposal and well servicing assets located in the Appalachian region for
approximately $1.8 million. Through an acquisition completed in early 1995, the
Company began conducting brine disposal and well services in Oklahoma.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

NATURE OF BUSINESS

The Company operates in an environment with many financial risks,
including, but not limited to, the ability to acquire additional economically
recoverable oil and gas reserves, the inherent risks of the search for,
development of and production of oil and gas, the ability to sell oil and gas at
prices which will provide attractive rates of return, and the highly competitive
nature of the industry and worldwide economic conditions. The Company's ability
to expand its reserve base and diversify its operations is also dependent upon
the Company's ability to obtain the necessary capital through operating cash
flow, additional borrowings or additional equity funds.

FINANCIAL INSTRUMENTS

The Company's financial instruments include cash and equivalents,
accounts receivable, accounts payable and debt obligations. The book value of
cash and equivalents, accounts receivable and payable and short term debt are
considered to be representative of fair value because of the short maturity of
these instruments. The Company believes that the carrying value of its
borrowings under its bank credit facility approximates their fair value as they
bear interest at the bank's prime rate or Libor. The Company's accounts
receivable are concentrated in the oil and gas industry. The Company does not
view such a concentration as an unusual credit risk.

Interest rate swap agreements, which are used by the Company in the
management of interest exposure, are accounted for on an accrual basis. Income
and expense resulting from these agreements are recorded in the same category as
expense arising from the related liability. Amounts to be paid or received under
interest rate swap agreements are recognized as an adjustment to expense in the
periods in which they accrue. At December 31, 1995, the Company had $40 million
of borrowings subject to two swap agreements at rates of 6.25% and 6.49% through
July 12, 1999 and October 12, 1999, respectively.

The Company uses futures, option and swap contracts to reduce the
effects of fluctuations in crude oil and natural gas prices. At December 31,
1995, the Company had open contracts for natural gas price swaps in the amount
of 360,000 MMbtu's. These contracts expire monthly through September 1996. The
resulting transaction gains and losses are included in net income and are
determined monthly. Net gains for the year ended December 31, 1995 approximated
$221,000 relating to these derivatives.

F-14

ACCOUNTING STANDARDS

EARNINGS PER COMMON SHARE

Net income per share is computed by subtracting preferred dividends
from net income and dividing by the weighted average number of common and common
equivalent shares outstanding. The calculation of fully diluted earnings per
share assumes conversion of convertible securities when the result would be
dilutive. Outstanding options and warrants are included in the computation of
net income per common share when their effect is dilutive.

RECLASSIFICATIONS

Certain reclassifications have been made to prior period presentation
to conform with current period classifications.

(3) ACQUISITION AND DEVELOPMENT

Since 1990, the Company has acquired $200 million of oil and gas
properties and field service assets. During 1995, the Company completed $71.1
million of acquisitions. The purchases were funded by working capital, advances
under a revolving credit facility and the issuance of common stock. These
acquisitions are discussed below.

1995 ACQUISITIONS

Appalachia
- ----------
Transfuel, Inc. In September 1995, the Company acquired proved oil and
gas reserves, 1,100 miles of gas gathering lines and 175,000 undeveloped acres
in Ohio, Pennsylvania and New York from Transfuel, Inc. for $20.2 million and
approximately $800,000 of Common Stock.

Parker & Parsley Petroleum Company. In August 1995, the Company
purchased proved oil and gas reserves, 300 miles of gas gathering lines and
16,400 undeveloped acres in Pennsylvania and West Virginia from Parker & Parsley
Petroleum Company for $20.2 million.

Interests in approximately 470 Company operated properties in
Pennsylvania and Ohio were purchased for $5.4 million.

F-15
66

Oklahoma
- --------
The Company purchased interests in 52 wells in the Caddo and Canadian
counties for $4.8 million. The Company assumed operation of half of these wells.

Interests in Company operated properties were acquired for $3.2 million.
Texas
- -----
The Company purchased interests in 140 wells located primarily in the Big
Lake Area of west Texas and the Laura La Velle Field of east Texas for $2.8
million.

1994 ACQUISITIONS

Oklahoma
- --------
Red Eagle Resources Corporation. In December 1994, the Company acquired
effective control of Red Eagle principally through the purchase of two common
stockholders' holdings. In February 1995, the remaining stockholders of Red
Eagle common stock voted to approve the merger of Red Eagle with a wholly owned
subsidiary of the Company in exchange for approximately 2.2 million shares of
the Company's common stock. The additional equity of Red Eagle acquired in
February 1995 is reflected as minority interest on the Company's balance sheet
at December 31, 1994. Acquisition costs of approximately $46.5 million have been
capitalized in regards to this acquisition. Red Eagle's assets included
interests in approximately 370 producing wells located primarily in the Okeene
Field of Oklahoma's Anadarko Basin. Subsequently, the Company acquired
additional interests in 70 Red Eagle wells for $1.7 million.

Texas
- -----
Grand Banks Energy Company. The Company purchased Grand Banks for $3.7
million. Grand Banks' assets included interests in 182 producing wells located
in west Texas, essentially all of which are now operated by the Company. Grand
Banks owned an average working interest of 70% in the producing reserves, of
which 60% was oil. Approximately 40% of Grand Banks' proved reserves are
attributed to the Mills-Strain Unit located in the Sharon Ridge Field of
Mitchell County, Texas. The Mills-Strain Unit is a waterflood unit producing
from the Clearfork Formation at a depth of approximately 2,000 feet. The
Mills-Strain Unit has a remaining life of over 20 years. The Company also
purchased, for $1.2 million, additional interests in a number of the Grand Banks
properties.

Gillring Oil Company. The Company acquired Gillring for $11.5 million.
Gillring's assets included $5.2 million of working capital and interests in 106
producing oil and gas wells located in south Texas. Gillring owned an average
working interest of 80% in the producing reserves of which 80% were gas. The
Gillring properties are located principally in two fields producing from the
Wilcox and Vicksburg formations ranging in depths from 4,000 to 11,000 feet.
Subsequent to the purchase of Gillring, the Company acquired, for $2.1 million,
the limited partner interests and associated debt of a partnership for which
Gillring acted as general partner.

The Company acquired from four parties interests in 118 producing wells in
the Big Lake Area of west Texas and the Laura La Velle Field of east Texas for
$6.5 million.

Appalachia
- ----------
The Company acquired, for $5.0 million, interests in 98 new wells and
additional interests in 436 wells which the Company already operated.

F-16

1993 ACQUISITIONS

Appalachia
- ----------
Mark Resources Corporation. In December 1993, the Company acquired Mark for
approximately $28.4 million. Mark's assets were located primarily in the
Meadville Area of the Appalachian Basin. Mark owned interests in 655 producing
wells, 230 miles of gas gathering lines and over 180 proven drilling locations.
Mark operated nearly all of its properties.

Ohio Trend Area. The Company acquired interests in 119 wells and over 70
miles of gas gathering systems in Ohio for $2.9 million.

Meadville Area. The Company acquired interests in 274 wells, one disposal
facility and various undeveloped leaseholds for $2.5 million.

Texas
- -----
Big Lake Area. The Company acquired from three parties interests in 84
producing wells in the Big Lake Area of west Texas for $4.2 million.

Laura La Velle Field. The Company acquired interests in 7,734 gross (7,524
net) acres in the Laura La Velle Field located in east Texas for $2.5 million.
The Company assumed operations of 44 producing wells.

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following table presents unaudited, pro forma operating results as if
the transactions had occurred at the beginning of each period presented. The pro
forma operating results include the following acquisitions, all of which were
accounted for as purchase transactions; (i) the purchase of Grand Banks Energy
Company, (ii) the purchase of Gillring Oil Company, (iii) the purchase of Red
Eagle Resources Corporation, (iv) the purchase by the Company of certain oil and
gas properties from a subsidiary of Parker & Parsley Petroleum, Co., (v) the
purchase by the Company of certain oil and gas properties from Transfuel, Inc.,
(vi) the private placement of 1.15 million shares of Convertible Preferred Stock
and the application of the net proceeds therefrom and (vii) the private
placement of 1.2 million shares of Common Stock and the application of the net
proceeds therefrom.

Year ended December 31,
-------------------------------------
1994 1995
----------------- ----------------
(in thousands except per share data)

Revenues....................... $ 64,465 $ 62,418
Net income..................... 8,359 6,583
Earnings per share............. 0.51 0.39
Total assets................... 185,338 214,664
Stockholders' equity........... 81,755 99,243

The pro forma operating results have been prepared for comparative purposes
only. They do not purport to present actual operating results that would have
been achieved had the acquisition been made at the beginning of each period
presented or to necessarily be indicative of future operations. Included in the
1994 pro forma financial information are revenues regarding partnership
activities which contributed $0.22 per share. These same activities did not
occur in 1995.

F-17
68

(4) NOTES RECEIVABLE

In 1994, the Company issued $165,000 in notes receivable to three of its
officers in connection with their exercise of stock options. The notes accrued
interest at the prime rate plus 1% payable quarterly. In 1995, the notes were
repaid.

(5) INDEBTEDNESS

The Company had the following debt outstanding as of the dates shown.
Interest rates at December 31, 1995 are shown parenthetically:

December 31,
-------------------------------------
1994 1995
----------------- -----------------
(in thousands)

Bank credit facility (6.7%).......... $ 61,870 $ 83,035
Other (5.9% - 9.25%)................. 722 53
----------- -----------
62,592 83,088
Less amounts due within one year..... 707 53
----------- -----------
Long-term debt, net.................. $ 61,885 $ 83,035
=========== ===========

The Company maintains a $250 million revolving bank credit facility.
The facility provides for a borrowing base which is subject to semi-annual
redeterminations. At December 31, 1995, the borrowing base on the credit
facility was $105 million. The facility bears interest at prime rate or LIBOR
plus 0.75% to 1.25% depending upon the percentage of the borrowing base drawn.
Interest is payable quarterly and the loan is payable in sixteen quarterly
installments beginning February 1, 1999. A commitment fee of 3/8% of the undrawn
balance is payable quarterly. It is the Company's policy to extend the term
period of the credit facility annually. The weighted average interest rate on
these borrowings were 6.3% and 7.3% for the years ended December 31, 1994 and
1995, respectively. The weighted average interest rate gives effect to interest
rate swap arrangements which have the effect of fixing the interest rate on $40
million of the credit facility at a rate of 6.4%. The existing interest rate
swap arrangements will remain in effect through no less than July 1997 and no
longer than October 1999. The Company's other debt is comprised of secured
equipment financings.

The debt agreements contain various covenants relating to net worth,
working capital maintenance and financial ratio requirements. Interest paid
during the years ended December 31, 1993, 1994 and 1995 totaled $1.2 million,
$2.8 million and $4.9 million, respectively.

Maturities of indebtedness as of December 31, 1995 were as follows (in
thousands):

1996............................. $ 53
1997.............................
-
1998.............................
-
1999............................. 15,569
2000............................. 20,759
Remainder........................ 46,707
------------
$ 83,088
===========

F-18
69

(6) COMMITMENTS AND CONTINGENCIES

In January 1995, a lawsuit (the "Lawsuit") was filed in the Delaware
Court of Chancery, New Castle County, against Red Eagle Resources Corporation,
each of the members of the Board of Directors of Red Eagle and the Company. The
Plaintiff sought to represent all holders (the "Class") of Red Eagle common
stock, excluding the Red Eagle Directors and Lomak. A settlement was reached
during 1995 under which the Company paid $250,000 in cash plus 74,286 shares of
the Company's Common Stock.

The Company is involved in various other legal actions and claims
arising in the ordinary course of business. In the opinion of management, such
litigation and claims will be resolved without material adverse effect on the
Company's financial position.

(7) EQUITY SECURITIES

In 1993, $5,000,000 of 7-1/2% cumulative convertible exchangeable
preferred stock (the "7-1/2% Preferred Stock") was privately placed. The 7-1/2%
Preferred Stock is convertible, at the option of the holders, into 576,945
shares of common stock, at an average conversion price of $8.67 per share. The
Company may convert the 7-1/2% Preferred Stock into common stock if the closing
price for the common stock exceeds an average price of $11.70 for twenty out of
thirty consecutive trading days. Beginning in July 1996, the Company may redeem
the 7-1/2% Preferred Stock at a 7-1/2% premium to liquidation value. Holders of
the 7-1/2% Preferred Stock are entitled to two votes per share on matters
presented to the shareholders. At the Company's option, it can exchange the
7-1/2% Preferred Stock for convertible subordinate notes due July 1, 2003. The
notes carry the same conversion and redemption terms as the 7-1/2% Preferred
Stock.

In November 1995, the Company sold 1,150,000 shares of $2.03
convertible exchangeable preferred stock (the "$2.03 Preferred Stock") for $28.8
million. The $2.03 Preferred Stock is convertible into the Company's common
stock at a conversion price of $9.50 per share, subject to adjustment in certain
events. The $2.03 Preferred Stock is redeemable, at the option of the Company,
at any time on or after November 1, 1998, at redemption prices beginning at
105%. At the option of the Company, the $2.03 Preferred Stock is exchangeable
for the Company's 8-1/8% convertible subordinated notes due 2005. The notes
would be subject to the same redemption and conversion terms as the $2.03
Preferred Stock

In December 1995, the Company privately placed 1.2 million shares of
its Common Stock for $10.2 million to a state sponsored retirement plan.
Warrants to acquire 40,000 shares of common stock were outstanding at December
31, 1995. The warrants have an exercise price of $7.50 per share and expire in
December 1996.

F-19
70

(8) STOCK OPTION AND PURCHASE PLAN

The Company maintains a Stock Option Plan which authorizes the grant of
options of up to 1.5 million shares of Common Stock. However, no new options may
be granted which would result in their being outstanding aggregate options
exceeding 10% of the Company's common shares outstanding plus those shares
issuable under convertible securities. Under the plan, incentive and
non-qualified options may be issued to officers, key employees and consultants.
The plan is administered by the Compensation Committee of the Board. All options
issued under the plan vest 30% after one year, 60% after two years and 100%
after three years. The following is a summary of stock option activity:

Number of Options
--------------------------------------- Exercise
Price Range
1993 1994 1995 Per Share
----------- ---------- ---------- ----------------

Outstanding at beginning of year......... 254,001 428,983 680,483 $3.38 - $9.38
Granted.................................. 174,982 298,500 342,000 4.01 - 9.38
Canceled................................. - (16,000) (12,000) 3.75 - 7.75
Exercised................................ - (31,000) (33,334) 3.75 - 5.63
------------ ----------- ----------- -----------------

Outstanding at end of year............... 428,983 680,483 977,149 $3.38 - $9.38
============ ========== ========== =================

In 1994, the stockholders approved the 1994 Outside Directors Stock
Option Plan (the "Directors Plan"). Only Directors who are not employees of the
Company are eligible under the Directors Plan. The Directors Plan covers a
maximum of 200,000 shares. At December 31, 1995, 44,000 options were outstanding
under the Directors Plan of which 3,600 were exercisable as of that date. The
exercise price of the options ranges from $7.75 to $8.00 per share.

In 1994, the stockholders approved the 1994 Stock Purchase Plan (the
"1994 Plan") which authorizes the sale of up to 500,000 shares of common stock
to officers, directors, key employees and consultants. Under the Plan, the right
to purchase shares at prices ranging from 50% to 85% of market value may be
granted. The Company had a 1989 Stock Purchase Plan (the "1989 Plan") which was
identical to the 1994 Plan except that it covered 333,333 shares. Upon adoption
of the 1994 Plan, the 1989 Plan was terminated. The plans are administered by
the Compensation Committee of the Board. During the year ended December 31,
1995, the Company sold 85,800 unregistered common shares to officers and outside
directors. From inception of the 1989 Plan through December 31, 1995, a total of
388,000 unregistered shares had been sold, for a total consideration of
approximately $1.8 million at prices equal to 75% of market value at the time of
the sale.

(9) BENEFIT PLAN

The Company maintains a 401(K) Plan for the benefit of its employees.
The Plan permits employees to make contributions on a pre-tax salary reduction
basis. The Company makes discretionary contributions to the Plan. Company
contributions for 1993, 1994 and 1995 were $189,000, $226,000 and $346,000,
respectively.

F-20

(10) INCOME TAXES

Federal income tax (benefit) expense was ($81,000), $139,000 and $1.8
million for the years 1993, 1994 and 1995, respectively. The current portion of
the income tax provision represents alternative minimum tax currently payable. A
reconciliation between the statutory federal income tax rate and the Company's
effective federal income tax rate is as follows:

1993 1994 1995
------------- ------------- -----------

Statutory tax rate..................... 34% 34% 34%
Realization of valuation allowance..... (46) (29) (5)
Alternative minimum tax................ 6 - -
--------- -------- --------
Effective tax rate..................... (6)% 5% 29%
========= ======== ========

Income taxes paid...................... $ 159,000 $ 47,500 $ 60,000
========= ======== ========

In 1993, the Company adopted FASB Statement No. 109, "Accounting for
Income Taxes". Under Statement 109, the liability method is used in accounting
for income taxes. Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Prior to
the adoption, income tax expense was determined using the deferred method and
the Company reported tax expense equal to current alternative minimum taxes
payable. Deferred taxes have not been provided on temporary differences prior to
adoption due to the existence of net operating loss and other carryforwards.

Significant components of the Company's deferred tax liabilities and
assets are as follows (in thousands):

December 31,
-------------------------------------
1994 1995
---------------- ----------------

Deferred tax liabilities:
Depreciation.................................. $ 27,217 $ 29,130
=============== ================

Deferred tax assets:
Net operating loss carryforwards................. 6,042 6,193
Percentage depletion carryforward................ 4,388 4,388
AMT credits and other............................ 737 863
---------------- ----------------
Total deferred tax assets........................ 11,167 11,444

Valuation allowance for deferred tax assets...... (340) (40)
--------------- ----------------
Net deferred tax assets.......................... $ 10,827 $ 11,404
=============== ================

Net deferred tax liabilities..................... $ 16,390 $ 17,726
=============== ================

F-21
72

As permitted by Statement 109, the Company has elected not to restate
prior year financial statements. As a result of tax basis in excess of the basis
on the financial statements at January 1, 1993, the Company estimated deferred
tax assets of $2.6 million and deferred tax liabilities of $0.9 million, for net
deferred tax assets of $1.7 million. Due to uncertainty as to the realizability
of the tax benefit, a valuation allowance was established for the full amount of
the net deferred tax assets. In 1993, 1994 and 1995, income taxes were reduced
from the statutory rate of 34% by approximately $0.5 million, $0.9 million and
$0.3 million, respectively, through realization of a portion of the valuation
allowance, resulting in $1.2 million, $0.3 million and $40,000, respectively of
the remaining allowance at December 31, 1993, 1994 and 1995.

During 1993, the Company acquired Mark Resources Corporation (See Note
3), a taxable business combination accounted for as a purchase. Deferred tax
assets of $3.9 million and a deferred tax liability of $8.1 million were
recorded in connection with the business combination. During 1994, the Company
acquired Gillring Oil Company and Grand Banks Energy Company, taxable business
combinations accounted for as purchases. Deferred tax assets of $3.5 million and
deferred tax liabilities of $3.4 million were recorded in connection with these
transactions. The Company acquired Red Eagle Resources Corporation, a taxable
business combination accounted for as a purchase. Deferred tax liabilities of
$12.3 million and deferred tax assets of $0.3 million were recorded in
connection with this transaction.

As a result of the Company's issuance of equity and convertible debt
securities, it experienced a change in control during 1988 as defined by Section
382 of the Internal Revenue Code. The change in control placed limitations to
the utilization of net operating loss carryovers. At December 31, 1995, the
Company had available for federal income tax reporting purposes net operating
loss carryovers of approximately $13.3 million which are subject to annual
limitations as to their utilization and otherwise expire between 1996 and 2010,
if unused. The Company has alternative minimum tax net operating loss carryovers
of $8.2 million which are subject to annual limitations as to their utilization
and otherwise expire from 1996 to 2009 if unused. The Company has statutory
depletion carryover of approximately $8.5 million and an alternative minimum tax
credit carryover of approximately $500,000. The statutory depletion carryover
and alternative minimum tax credit carryover are not subject to limitation or
expiration.

(11) MAJOR CUSTOMERS

The Company markets its oil and gas production on a competitive basis.
The type of contract under which gas production is sold varies but can generally
be grouped into three categories: (a) life-of-the-well; (b) long-term (1 year or
longer); and (c) short-term contracts which may have a primary term of one year,
but which are cancelable at either party's discretion in 30-120 days. At
December 31, 1995, approximately 59% of the Company's gas production was being
sold under market sensitive contracts which do not contain floor price
provisions. For the year ended December 31, 1995, no one customer accounted for
more than 10% of the Company's total oil and gas revenues. Oil is sold on a
basis such that the purchaser can be changed on 30 days notice. The price
received is generally equal to a posted price set by the major purchasers in the
area. The Company sells to oil purchasers on a basis of price and service.

The Company has currently hedged less than 3% of its monthly production
through September 1996. These hedges involve fixed price arrangements and other
price arrangements at a variety of prices, floors and caps. Although these
hedging activities provide the Company some protection against falling prices,
these activities also reduce the potential benefits to the Company of price
increases above the levels of the hedges.

F-22
73

(12) OIL AND GAS ACTIVITIES

The following summarizes selected information with respect to oil and
gas producing activities:

Year Ended December 31,
--------------------------------------------------------
1993 1994 1995
---------------- --------------- ----------------
(in thousands)

Capitalized costs:
Proved properties...................................... $ 67,370 $ 132,775 $ 209,310
Unproved properties.................................... 723 598 763
---------------- --------------- ----------------
Total.................................................. 68,093 133,373 210,073

Accumulated depletion amortization..................... (12,783) (20,409) (33,371)
---------------- --------------- ----------------

Net capitalized costs.................................. $ 55,310 $ 112,964 $ 176,702
================ =============== ================

Costs incurred:
Acquisition............................................ $ 43,177 $ 59,501 $ 69,244
Development............................................ 3,695 9,518 9,968
Exploration............................................ 131 192 216
---------------- --------------- ----------------

Total costs incurred................................... $ 47,003 $ 69,211 $ 79,428
================ =============== ================

(13) SUBSEQUENT EVENTS

In February 1996, the Company completed three oil and gas property
acquisitions for $17.5 million of consideration. The properties are located in
Lomak's core operating areas of Appalachia and Texas. In aggregate, the
acquisitions are estimated to contain proved reserves of 20.2 Bcf of gas and
240,000 Bbls of oil, or 21.6 Bcfe in total.

In March 1996, the Company's Board of Directors approved resolutions
authorizing the Company to repurchase shares of its Common Stock from odd-lot
holders. The Company will acquire any and all shares from stockholders owning 99
or fewer shares for cash at market prices. Additionally, the Board of Directors
approved a dividend of $.01 per share to holders of its Common Stock to be paid
on March 29, 1996.

(14) RELATED PARTY TRANSACTIONS

Mr. Edelman, Chairman of the Company, is also an executive officer and
shareholder of Snyder Oil Corporation ("SOCO"). At December 31, 1995, Mr.
Edelman owned 6.0% of the Company's common stock. In 1994, the Company
repurchased 30,000 shares of its common stock from SOCO for $240,000. The
purchase price was based upon the prior day's closing price for the stock. In
1995, SOCO sold its remaining shares of the Company's common stock.

In 1995, the Company acquired SOCO's interest in certain wells located
in Appalachia for $4 million. The price was determined based on arms-length
negotiations through a third-party broker retained by SOCO. Subsequent to the
transaction, the Company and SOCO no longer held interests in any of the same
properties.

F-23

(15) UNAUDITED SUPPLEMENTAL RESERVE INFORMATION

The Company's proved oil and gas reserves are located in the United
States. Proved reserves are those quantities of crude oil and natural gas which,
upon analysis of geological and engineering data, can with reasonable certainty
be recovered in the future from known oil and gas reservoirs. Proved developed
reserves are those proved reserves which can be expected to be recovered from
existing wells with existing equipment and operating methods. Proved undeveloped
oil and gas reserves are proved reserves that are expected to be recovered from
new wells on undrilled acreage.

QUANTITIES OF PROVED RESERVES

Crude Oil Natural Gas
-------------- ----------------
(Bbls) (Mcf)
(in thousands)

Balance, December 31, 1992 1,980 17,615
Revisions................................................. (35) 2,559
Extensions, discoveries and additions..................... 9 305
Purchases................................................. 2,905 57,125
Sales..................................................... (2) (451)
Production................................................ (318) (2,590)
--------------- -----------------

Balance, December 31, 1993 4,539 74,563
Revisions................................................. 15 630
Extensions, discoveries and additions..................... 15 6,605
Purchases................................................. 4,599 75,698
Sales..................................................... (79) (1,130)
Production................................................ (640) (6,996)
--------------- -----------------

Balance, December 31, 1994 8,449 149,370
Revisions.................................................. 255 (3,513)
Extensions, discoveries and additions...................... 475 10,076
Purchases.................................................. 2,618 90,575
Sales...................................................... (21) (1,150)
Production................................................. (913) (12,471)
--------------- -----------------

Balance, December 31, 1995 10,863 232,887
=============== =================

Proved developed reserves

December 31, 1993............................................ 3,344 38,373
============== ================

December 31, 1994............................................ 6,430 97,251
============== ================

December 31, 1995............................................ 8,880 174,958
============== ================

The "Standardized Measure of Discounted Future Net Cash Flows Relating
to Proved Oil and Gas Reserves" (Standardized Measure) is a disclosure
requirement under Statement of Financial Accounting Standards No. 69
"Disclosures about Oil and Gas Producing Activities". The Standardized Measure
does not purport to present the fair market value of proved oil and gas
reserves. This would require consideration of expected future economic and
operating conditions, which are not taken into account in calculating the
Standardized Measure.

F-24

Future cash inflows were estimated by applying year end prices to the
estimated future production less estimated future production costs based on year
end costs. Future net cash inflows were discounted using a 10% annual discount
rate to arrive at the Standardized Measure.

STANDARDIZED MEASURE

As of December 31,
-------------------------------------------------------------
1993 1994 1995
------------------ ------------------ ------------------
(in thousands)

Future cash inflows........................... $ 255,363 $ 457,048 $ 729,566

Future costs:
Production............................... (74,247) (133,972) (256,374)
Development.............................. (40,224) (52,102) (60,554)
------------------ ------------------ -------------------

Future net cash flows......................... 140,892 270,974 412,638

Income taxes.................................. (34,031) (59,950) (102,108)
----------------- ------------------ -------------------

Total undiscounted future net cash flows...... 106,861 211,024 310,530

10% discount factor........................... (53,110) (91,475) (136,480)
------------------ ------------------ -------------------

Standardized measure.......................... $ 53,751 $ 119,549 $ 174,050
================== ================== ==================

CHANGES IN STANDARDIZED MEASURE

As of December 31,
--------------------------------------------------------------
1993 1994 1995
------------------- ------------------ -----------------
(in thousands)

Standardized measure, beginning of year...... $ 21,608 $ 53,751 $ 119,549

Revisions:
Prices................................. (963) 4,224 (4,100)
Quantities............................. (1,085) 2,240 2,267
Estimated future development costs..... - - (5,238)
Accretion of discount................... 2,161 6,512 15,054
Income taxes........................... (6,936) (19,624) (24,200)
-------------------- ------------------- ------------------

Net revisions.......................... (6,823) (6,648) (16,217)

Purchases.................................... 45,271 84,836 87,741

Extensions, discoveries and additions........ 716 2,402 7,419

Production................................... (6,711) (14,442) (22,487)

Sales........................................ (310) (350) (1,955)
-------------------- ------------------- ------------------

Standardized measure, end of year............ $ 53,751 $ 119,549 $ 174,050
=================== ================== =================

F-25

LOMAK PETROLEUM, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

December 31, March 31,
1995 1996
----------------- ----------------
(unaudited)

ASSETS
Current assets
Cash and equivalents.......................................... $ 3,047 $ 651
Accounts receivable........................................... 14,938 19,235
Inventory and other........................................... 1,114 1,290
----------------- ----------------
19,099 21,176
----------------- ----------------

Oil and gas properties, successful efforts method............. 210,073 229,595
Accumulated depletion, depreciation and amortization.......... (33,371) (38,103)
----------------- ----------------
176,702 191,492
----------------- ----------------

Gas transportation and field service assets................... 23,167 23,744
Accumulated depreciation...................................... (4,304) (4,205)
----------------- ----------------
18,863 19,539
----------------- ----------------
$ 214,664 $ 232,207
================= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable.............................................. $ 9,084 $ 9,618
Accrued liabilities........................................... 3,761 5,933
Accrued payroll and benefit costs .......................... 1,762 1,346
Current portion of debt (Note 5).............................. 53 26
----------------- ----------------
14,660 16,923
----------------- ----------------

Long-term debt (Note 5)....................................... 83,035 95,090

Deferred taxes (Note 10)...................................... 17,726 19,048

Commitments and contingencies (Note 6)........................

Stockholders' equity (Notes 7 and 8)
Preferred stock, $1 par, 2,000,000 shares authorized,
7-1/2% convertible preferred, 200,000 issued
(liquidation preference $5,000,000)....................... 200 200
$2.03 convertible preferred, 1,150,000 issued
(liquidation preference $28,750,000)...................... 1,150 1,150
Common stock, $.01 par, 20,000,000 shares authorized,
13,322,738 and 13,402,246 issued.......................... 133 134
Capital in excess of par value................................ 101,773 101,881
Retained earnings (deficit)................................... (4,013) (2,219)
----------------- ----------------
99,243 101,146
================= ================
$ 214,664 $ 232,207
================= ================

SEE ACCOMPANYING NOTES.

F-26
77

LOMAK PETROLEUM, INC.

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Three Months Ended March 31,
---------------------------------------
1995 1996
---------------- -----------------
(unaudited)

Revenues
Oil and gas sales........................................ $ 7,430 $ 16,088
Field services........................................... 2,464 3,300
Gas transportation and marketing......................... 786 1,028
Interest and other....................................... 223 97
---------------- -----------------
10,903 20,513
---------------- -----------------

Expenses
Direct operating......................................... 3,150 5,758
Field services........................................... 1,598 2,529
Gas transportation and marketing......................... 199 290
Exploration.............................................. 130 180
General and administrative............................... 758 918
Interest................................................. 1,156 1,554
Depletion, depreciation and amortization.. 3,000 5,278
---------------- -----------------
9,991 16,507
---------------- -----------------

Income before taxes...................................... 912 4,006

Income taxes
Current.................................................. 16 80
Deferred................................................. 101 1,323
---------------- -----------------
117 1,403
---------------- -----------------

Net income............................................... $ 795 $ 2,603
================ =================

Net income applicable to
common shares............................................ $ 701 $ 1,926
================ =================

Earnings per common share................................ $ 0.07 $ 0.14
================ =================

Weighted average shares outstanding...................... 10,555 13,691
================ =================

SEE ACCOMPANYING NOTES.

F-27
78

LOMAK PETROLEUM, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

Three Months Ended March 31,
---------------------------------------
1995 1996
---------------- -----------------
(unaudited)

Cash flows from operations:
Net income................................................ $ 795 $ 2,603
Adjustments to reconcile net income to
net cash provided by operations:
Depletion, depreciation and amortization.................. 3,000 5,278
Deferred income taxes..................................... 101 1,323
Changes in working capital net of
effects of purchases of businesses:
Accounts receivable.............................. 1,321 (3,480)
Inventory and other.............................. 37 (250)
Accounts payable................................. (1,844) 477
Accrued liabilities and payroll and benefit
costs......................................... (1,593) 361
Gain on sale of assets and other.......................... (127) (72)
---------- -----------

Net cash provided by operations........................... 1,690 6,240

Cash flows from investing:
Acquisition of businesses, net of cash.................... - (13,950)
Oil and gas properties.................................... (4,509) (6,181)
Additions to gas transportation and field service
assets.................................................. (282) (169)
Proceeds on sale of assets................................ 198 338
---------- -----------

Net cash used in investing............................ (4,593) (19,962)

Cash flows from financing:
Proceeds from indebtedness................................ 4,400 12,055
Repayments of indebtedness................................ (156) (27)
Preferred stock dividends................................. (94) (677)
Common stock dividends.................................... - (132)
Proceeds from common stock issuance....................... 29 107
Repurchase of common stock................................ (45) -
---------- -----------

Net cash provided by financing............................ 4,134 11,326
---------- -----------

Change in cash............................................ 1,231 (2,396)

Cash and equivalents at beginning of period...............
4,897 3,047
---------- -----------

Cash and equivalents at end of period..................... $ 6,128 $ 651
========== ===========

SEE ACCOMPANYING NOTES.

F-28
79

LOMAK PETROLEUM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) ORGANIZATION:

Lomak Petroleum, Inc. ("Lomak" or the "Company") is an independent oil
and gas company engaged in the acquisition, production, development and
exploration of oil and gas in the United States. Lomak's core areas of operation
are located in the Mid-Continent and Appalachia regions. Since January 1, 1990,
the Company has made 65 acquisitions at a total cost of over $215 million and
$26 million has been expended on development and exploration activities. As a
result, proved reserves and production have each grown during this period at a
rate in excess of 80% per annum. At December 31, 1995, proved reserves totaled
298 Bcfe, having a pre-tax present value at constant prices of $229 million and
a reserve life of nearly 12 years.

Lomak's acquisition effort is focused on properties with prices of less
than $30 million within its core areas of operation. Management believes these
purchases are less competitive than those involving larger property interests.
To the extent purchases continue to be made primarily within existing core
areas, efficiencies in operations, drilling, marketing and administration should
be realized. In 1992, Lomak began to exploit its growing inventory of
development projects. In 1994, the Company initiated exploration activities. In
the future, Lomak expects its growth to be driven by a combination of
acquisitions and development and, to a lesser extent, exploration.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION

OIL AND GAS PROPERTIES

The Company follows the successful efforts method of accounting.
Exploratory costs which result in the discovery of reserves and the cost of
development wells are capitalized. Geological and geographical costs, delay
rentals and costs to drill unsuccessful exploratory wells are expensed.
Depletion is provided on the unit-of-production method. Oil is converted to Mcfe
at the rate of six Mcf per barrel. The depletion rates per Mcfe produced were
$.73 and $.72 respectively, in the first quarters of 1995 and 1996.
Approximately $12.2 million and $12.3 million of oil and gas properties were
classified as proved undeveloped or unproved and, therefore, not subject to
depletion as of December 31, 1995 and March 31, 1996, respectively. These costs
are assessed periodically to determine whether their value has been impaired. If
they have, the amount of any impairment is expensed.

GAS TRANSPORTATION AND FIELD SERVICE ASSETS

The Company owns and operates over 1,900 miles of gas gathering systems
in proximity to its principal gas properties. Depreciation is calculated on the
straight-line method based on estimated useful lives ranging from four to
fifteen years.

The Company receives fees for providing field related services. These
fees are recognized as earned. Depreciation is calculated on the straight-line
method based on estimated useful lives ranging from one to five years, except
buildings which are being depreciated over ten to twenty-five years.

F-29
80

USE OF ESTIMATES

NATURE OF BUSINESS

FINANCIAL INSTRUMENTS

The Company's financial instruments include cash and equivalents,
accounts receivable, accounts payable and debt obligations. The book value of
cash and equivalents, accounts receivable and payable and short term debt are
considered to be representative of fair value because of the short maturity of
these instruments. The Company believes that the carrying value of its
borrowings under its bank credit facility approximates their fair value as they
bear interest at rates indexed at Libor. The Company's accounts receivable are
concentrated in the oil and gas industry. The Company does not view such a
concentration as an unusual credit risk.

Interest rate swap agreements, which are used by the Company in the
management of interest exposure, is accounted for on an accrual basis. Income
and expense resulting from these agreements are recorded in the same category as
expense arising from the related liability. Amounts to be paid or received under
interest rate swap agreements are recognized as an adjustment to expense in the
periods in which they accrue. At March 31, 1996, the Company had $40 million of
borrowings subject to two interest rate swap agreements at rates of 6.25% and
6.49% through July 1999 and October 1999, respectively.

The Company uses futures, option and swap contracts to reduce the
effects of fluctuations in crude oil and natural gas prices. At March 31, 1996,
the Company had open contracts for natural gas price swaps in the amount of
100,000 Mmbtu's and open contract for oil price calls of 175,000 barrels. These
contracts expire monthly through September 1996. The resulting transaction gains
and losses are included in net income and are determined monthly. Net gains for
the three months ended March 31, 1996 approximated $55,000 relating to these
derivatives.

NET INCOME PER SHARE

F-30
81

RECLASSIFICATIONS

Certain reclassifications have been made to prior period presentations
to conform with current period classifications.

(3) ACQUISITIONS:

Since 1990, the Company has acquired over $215 million of oil and gas
properties and field service assets. During 1995, the Company completed $71.1
million of acquisitions. In the first three months of 1996, acquisitions
totaling $18.2 million were completed. The purchases were funded by working
capital, advances under a revolving credit facility and the issuance of common
stock. These acquisitions are discussed below.

1996 ACQUISITIONS

Mid-Continent
- -------------
The Company purchased incremental interests in approximately 40
properties located in the Laura La Velle Field of east Texas for $.8 million.

Appalachia
- ----------
Eastern Petroleum Company. In January 1996, the Company acquired
proved oil and gas reserves and 40 miles of gas gathering lines in Ohio for
$13.7 million.

The Company purchased incremental interests in approximately 270
operated properties in Pennsylvania and Ohio for $3.7 million.

1995 ACQUISITIONS

Mid-Continent
- -------------
Red Eagle Resources Corporation. In December 1994, the Company acquired
effective control of Red Eagle through the purchase of two stockholders'
holdings. In early 1995, the remaining stockholders of Red Eagle voted to
approve the merger of Red Eagle with a wholly owned subsidiary of the Company in
exchange for approximately 2.2 million shares of the Company's common stock. The
additional equity of Red Eagle acquired in February 1995 was reflected as
minority interest on the Company's balance sheet at December 31, 1994.
Acquisition costs of approximately $46.5 million were capitalized in regards to
this acquisition. Red Eagle's assets included interests in approximately 370
producing wells located primarily in the Okeene Field of Oklahoma's Anadarko
Basin. Subsequently, the Company acquired additional interests in 70 Red Eagle
wells for $1.7 million.

The Company purchased interests in 52 wells in the Caddo and Canadian
Counties of Oklahoma for $4.8 million. The Company assumed operation of half of
these wells.

Additional interests in properties acquired from Red Eagle in 1994 were
purchased for $3.2 million.

The Company purchased interests in 140 wells located primarily in the
Big Lake Area of west Texas and the Laura La Velle Field of east Texas for $2.8
million.

F-31
82

Appalachia
- ----------
Transfuel, Inc. In September 1995, the Company acquired
proved oil and gas reserves, 1, 100 miles of gas gathering lines and
175,000 undeveloped acres of Ohio, Pennsylvania and New York from Transfuel,
Inc. for $21 million.

Parker & Parsley Petroleum Company. In August, the Company purchased
proved oil and gas reserves, 300 miles of gas gathering lines and 16,400
undeveloped acres in Pennsylvania and West Virginia from Parker & Parsley
Petroleum Company for $20.2 million.

UNAUDITED PRO FORMA FINANCIAL INFORMATION

Three Months Ended March 31,
-------------------------------------
1995 1996
----------------- ----------------
(in thousands except per share data)

Revenues....................... $ 14,941 $ 20,513
Net income..................... 1,686 2,603
Earnings per share............. 0.14 0.14

The pro forma operating results have been prepared for comparative
purposes only. They do not purport to present actual results had the
acquisitions been made at the beginning of each period presented or to
necessarily be indicative of future operations.

(4) NOTES RECEIVABLE:

At March 31, 1995, the Company had $165,000 in notes receivable to
three of its officers in connection with their exercise of stock options. The
notes accrued interest at the prime rate plus 1% payable quarterly. Later in
1995, the notes were repaid.

(5) INDEBTEDNESS:

The Company had the following debt outstanding as of the dates shown.
Interest rates at March 31, 1996 are shown parenthetically (in thousands):

December 31, March 31,
1995 1996
----------------- -----------------
(unaudited)

Bank credit facility (6.85%)....... $ 83,035 $ 95,090
Other (6.00%)...................... 53 26
----------------- -----------------
83,088 95,116
Less amounts due within one year... 53 26
----------------- -----------------

Long-term debt, net................ $ 83,035 $ 95,090
================= =================

F-32

The Company maintains a $250 million revolving bank credit facility.
The facility provides for a borrowing base which is subject to semi-annual
redeterminations. At April 30, 1996, the borrowing base on the credit facility
was $150 million. The facility bears interest at prime rate or LIBOR plus 0.75%
to 1.25% depending upon the percentage of the borrowing base drawn. Interest is
payable quarterly and the loan is payable in sixteen quarterly installments
beginning February 1, 1999. A commitment fee of 3/8% of the undrawn balance is
payable quarterly. It is the Company's policy to extend the term period of the
credit facility annually. The weighted average interest rate on these borrowings
were 7.6% and 6.5% for the three months ended March 31, 1995 and 1996,
respectively. The weighted average interest rate gives effect to interest rate
swap arrangements which have the effect of fixing the interest rate on $40
million of the credit facility at a rate of 6.4%. The existing interest rate
swap arrangements will remain in effect through no less than July 1997 and no
longer than October 1999. The Company's other debt is comprised of secured
equipment financings.

The debt agreements contain various covenants relating to net worth,
working capital maintenance and financial ratio requirements. Interest paid
during the three months ended March 31, 1995 and 1996 totaled $1.1 million and
$658,000, respectively.

(6) COMMITMENTS AND CONTINGENCIES:

The Company is involved in various legal actions and claims arising in
the ordinary course of business. In the opinion of management, such litigation
and claims are likely to be resolved without material adverse effect on the
Company's financial position.

(7) EQUITY SECURITIES

In 1993, $5 million of 7-1/2% cumulative convertible exchangeable
preferred stock (the "7-1/2% Preferred Stock") was privately placed. In April
and May 1996, the Company exercised it's option and converted the 7-1/2%
Preferred Stock into 576,945 shares of Common Stock.

In December 1995, the Company privately placed 1.2 million shares of
its Common Stock for $10.2 million to a state employees retirement plan. In
April 1996, the Company privately placed 600,000 shares of its Common Stock to a
limited number of institutional investors for approximately $6.9 million.
Warrants to acquire 40,000 shares of common stock were outstanding at March 31,
1996. The warrants have an exercise price of $7.50 per share and expire in
December 1996.

F-33
84

(8) STOCK OPTION AND PURCHASE PLAN

The Company maintains a Stock Option Plan which authorizes the grant of
options of up to 1.5 million shares of Common Stock. However, no new options may
be granted which would result in their being outstanding aggregate options
exceeding 10% of common shares outstanding plus those shares issuable under
convertible securities. Under the plan, incentive and non-qualified options may
be issued to officers, key employees and consultants. The plan is administered
by the Compensation Committee of the Board. All options issued under the plan
vest 30% after one year, 60% after two years and 100% after three years. During
the three months ended March 31, 1996, options covering 97,600 shares were
exercised at prices ranging from $3.38 to $8.25 per share. At March 31, 1996,
options covering a total of 1.2 shares were outstanding under the plan, of which
493,000 options were exercisable. The exercise prices of the outstanding options
range from $3.38 to $10.50.

In 1994, the stockholders approved the 1994 Outside Directors Stock
Option Plan (the "Directors Plan"). Only Directors who are not employees of the
Company are eligible under the Directors Plan. The Directors Plan covers a
maximum of 200,000 shares. At March 31, 1996, 44,000 options were outstanding
under the Directors Plan of which 3,600 were exercisable as of that date. The
exercise price of the options ranges from $7.75 to $8.00 per share.

(9) BENEFIT PLAN

(10) INCOME TAXES:

In 1993, the Company adopted FASB Statement No. 109, "Accounting for
Income Taxes". As permitted by Statement 109, the Company elected not to restate
prior year financial statements. As a result of tax basis in excess of the basis
on the financial statements at January 1, 1993, the Company estimated deferred
tax assets of $2.6 million and deferred tax liabilities of $900,000, for net
deferred tax assets of $1.7 million. Due to uncertainty as to the Company's
ability to realize the tax benefit, a valuation allowance was established for
the full amount of the net deferred tax assets. In 1993 and 1994, income taxes
were reduced from the statutory rate of 34% by approximately $.5 million and $.3
million, respectively, through realization of the valuation allowance that was
established.

F-34

During 1993, the Company acquired Mark Resources Corporation, in a
taxable combination accounted for as a purchase. Deferred tax assets of $3.9
million and a deferred tax liability of $8.1 million were recorded in the
transaction. During 1994, the Company acquired Gillring Oil Company and Grand
Banks Energy Company, taxable combinations accounted for as purchases. Deferred
tax assets of $3.5 million and deferred tax liabilities of $3.4 million were
recorded in these transactions. In late 1994, the Company acquired Red Eagle
Resources Corporation, a taxable combination accounted for as a purchase.
Deferred tax liabilities of $12.3 million and deferred tax assets of $.3 million
were recorded in this transaction.

For the three months ended March 31, 1995 and 1996, the Company made a
provision for federal income taxes of $117,000 and $1.4 million, respectively.
At March 31, 1996, the Company had available for federal income tax reporting
purposes net operating loss carryovers of approximately $13.3 million which are
subject to annual limitations as to their utilization and expire between 1996
and 2010. The Company has alternative minimum tax net operating loss carryovers
of $8.2 million which are subject to annual limitations as to their utilization
and expire from 1996 to 2009. The Company has statutory depletion carryover of
approximately $8.5 million and an alternative minimum tax credit carryover of
$500,000. The statutory depletion carryover and alternative minimum tax credit
carryover are not subject to limitation or expiration.

(11) MAJOR CUSTOMERS:

The Company markets its oil and gas production on a competitive basis.
The type of contract under which gas production is sold varies but can generally
be grouped into three categories: (a) life-of-the-well; (b) long-term (1 year or
longer); and (c) short-term contracts which may have a primary term of one year,
but which are cancelable at either party's discretion in 30-120 days.
Approximately 58% of the Company's gas production is currently sold under market
sensitive contracts which do not contain floor price provisions. For the three
months ended March 31, 1996, no one customer accounted for more than 10% of the
Company's total oil and gas revenues. Oil is sold on a basis such that the
purchaser can be changed on 30 days notice. The price received is generally
equal to a posted price set by the major purchasers in the area. Oil is sold on
a basis of price and service.

The Company has currently hedged less than 3% of its production through
September 1996. These hedges involve fixed price arrangements and other price
arrangements at a variety of prices, floors and caps. Although these hedging
activities provide the Company some protection against falling prices, these
activities also reduce the potential benefits to the Company of price increases
above the levels of the hedges.

F-35

(12) OIL AND GAS ACTIVITIES:

The following summarizes selected information with respect to oil and
gas activities (in thousands):

December 31, March 31,
1995 1996
------------- -------------
(unaudited)

Capitalized costs:
Proved properties............................ $ 209,310 $ 228,780
Unproved properties.......................... 763 815
------------ ------------
Total........................................ 210,073 229,595
Accumulated depletion, depreciation and
amortization.............................. (33,371) (38,103)
------------ ------------

Net capitalized costs........................ $ 176,702 $ 191,492
============ ============

Three Months
Year Ended Ended
December 31, March 31,
1995 1996
----------- -----------
(unaudited)

Costs incurred:
Property acquisition......................... $ 69,244 $ 17,482
Development.................................. 9,968 2,046
Exploration.................................. 216 106
---------- ----------

Total costs incurred......................... $ 79,428 $ 19,634
========== ==========

(13) SUBSEQUENT EVENT:

In April 1996, the Company completed an oil and gas property
acquisition for $35.9 million. Approximately 90% of the reserves are in Texas,
Oklahoma and New Mexico with the remainder in the Rocky Mountains. The
properties acquired include 270 producing wells and 17,800 net undeveloped
acres. The acquired properties as of December 31, 1995 were estimated to contain
proved reserves of 72.9 Bcfe.

(14) RELATED PARTY TRANSACTIONS:

Mr. Edelman, Chairman of the Company, is also an executive officer and
shareholder of Snyder Oil Corporation ("SOCO"). At March 31, 1996, Mr. Edelman
owned 6.0% of the Company's common stock. In 1995, the Company acquired SOCO's
interest in certain wells located in Appalachia for $4 million. The price was
determined based on arms-length negotiations through a third-party broker
retained by SOCO. Subsequent to the transaction, the Company and SOCO no longer
hold interests in any of the same properties.

During 1995, the Company incurred fees of $145,000 to the Hawthorne
Company in connection with acquisitions. Mr. Aikman, a director of the Company,
is an executive officer and a principal owner of the Hawthorne Company. The fees
were consistent with those paid by the Company to third parties for similar
services.

F-36
87

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FACTORS AFFECTING FINANCIAL CONDITION AND LIQUIDITY

During the three months ended March 31, 1996, the Company reached
$232.2 million of assets and increased stockholders' equity to $101.1 million.
The growth was achieved primarily through acquisitions and development. Net
income for the first quarter of 1996 increased 227% to $2.6 million versus
$795,000 in the prior year. The increases were primarily due to higher
production volumes attributable to acquisitions and development and higher
product prices. Working capital at March 31, 1996 was $4.3 million. During the
quarter, long-term debt rose from $83.0 million to $95.1 million.

At March 31, 1996, capitalization totaled $215.3 million, of which 47%
was represented by stockholders' equity and 44% by long-term debt. Essentially
all of the long-term debt is comprised of borrowings under a $250 million
revolving bank credit facility. The facility currently provides for quarterly
payments of interest with principal payments beginning February 1999. In April
1996, the Company completed a $6.9 million private placement of common stock.
The proceeds were used to fund a portion of a $35.9 million acquisition which
was completed during April. The remaining portion of the acquisition was funded
by borrowings under the Company's existing revolving credit facility. In April
and May 1996, the Company exercised its option to convert the 7-1/2% Preferred
Stock into approximately 577,000 shares of common stock.

For the three months ended March 31, 1996 operating cash flow totaled
$9.4 million, a 133% increase over the prior year period. Cash flow plus bank
borrowings funded $20.2 million of acquisitions and development expenditures.
Approximately $7 million of the bank borrowings were repaid in April 1996 with
the proceeds received from the private placement of common stock. The Company
expects to continue to fund its activities from internally generated funds,
borrowings under its credit facility and the issuance of debt and equity
securities. During the next twelve months, non-discretionary capital
requirements include $2.4 million of preferred dividends and interest on the
Company's credit facility. Additionally, the Company expects to continue its
acquisition and development activities in 1996. Although these expenditures are
principally discretionary, the Company estimates that it will spend
approximately $15 million on development activities in 1996, of which $2 million
was incurred in the first three months. Cash flow is expected to be more than
sufficient to fund development expenditures with the remainder available to fund
acquisitions. In 1994, the Company instituted a program to repurchase its common
stock from stockholders who own less than 100 shares. From inception of the
program, through March 31, 1996 approximately 37,800 shares had been repurchased
for $310,700.

RESULTS OF OPERATIONS

F-37

During the quarter, oil and gas production volumes increased 84% to 6.5
Bcfe, an average of 72,000 Mcfe per day. Production revenues also benefited from
an 18% increase in the average price received per Mcfe of production from $2.09
to $2.46. The average oil price increased from $16.36 to $17.43 per barrel while
average gas prices increased 30% from $1.78 to $2.32 per Mcf. As a result of a
larger base of producing properties, operating expenses increased 83% to $3.2
million. However, the operating cost per Mcfe produced decreased slightly from
$.89 in 1995 to $.88 in 1996.

F-38

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

THE BOARD OF DIRECTORS AND STOCKHOLDERS
LOMAK PETROLEUM, INC.:

We have audited the accompanying statement of assets (other than productive oil
and gas properties) and liabilities of the Bannon Interests as of December 31,
1995, acquired pursuant to the purchase by Lomak Petroleum, Inc. ("Lomak"), on
April 4, 1996, as described in Note 1, and the related statement of revenues and
direct operating expenses for the year ended December 31, 1995. These financial
statements are the responsibility of Lomak's management. Our responsibility is
to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

The accompanying statements were prepared as described in Note 1 for the purpose
of complying with certain rules and regulations of the Securities and Exchange
Commission ("SEC") for inclusion in certain SEC regulatory reports and filings
and are not intended to be a complete financial presentation.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets (other than productive oil and gas properties)
and liabilities of the Bannon Interests as of December 31, 1995 acquired
pursuant to the purchase by Lomak as of April 4, 1996, as described in Note 1,
and the related revenues and direct operating expenses for the year ended
December 31, 1995, in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Houston, Texas
May 23, 1996

F-39
90

THE BANNON INTERESTS

STATEMENTS OF ASSETS (OTHER THAN
PRODUCTIVE OIL AND GAS PROPERTIES) AND
LIABILITIES (NOTE 1)

December 31, March 31,
1995 1996
----------------- -----------------
(unaudited)

Assets (other than productive oil and gas properties)
Accounts receivable $ 589,000 $ 551,000
Accounts payable and accrued liabilities (149,000) (105,000)
--------- ---------

Excess of assets (other than productive oil and gas
properties) acquired over liabilities assumed $ 440,000 $ 446,000
========= =========

See accompanying notes.

F-40
91

THE BANNON INTERESTS

STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES (NOTE 1)

Year ended Three months ended
December 31, March 31,
1995 1996
-------------------- --------------------
(unaudited)

Revenues $ 7,246,000 $ 1,703,000
Direct operating expenses (3,177,000) (562,000)
-------------------- --------------------

Excess of revenues over direct operating expenses $ 4,069,000 $ 1,141,000
==================== ====================

See accompanying notes.

F-41
92

THE BANNON INTERESTS

NOTES TO STATEMENT OF ASSETS
(OTHER THAN PRODUCTIVE OIL AND GAS PROPERTIES)
AND LIABILITIES AND STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES

(1) GENERAL:

ORGANIZATION

The accompanying statements present the assets (other than productive
oil and gas properties) and liabilities and revenues and direct operating
expenses of certain working and other interests in oil and gas properties (the
"Bannon Interests") purchased by Lomak Petroleum, Inc. ("Lomak") on April 4,
1996. Such financial statements were derived from the historical records of the
predecessor owner and represent Lomak's interest.

The Bannon Interests contain approximately 270 producing wells and 108
proven recompletion and development drilling opportunities. Also included are
17,300 net acres located in east and south Texas.

BASIS OF PRESENTATION

Full historical statements, including general and administrative
expenses and interest expense, have not been presented as such a presentation
would not be meaningful. The Bannon Interests acquired represent developed
producing properties, as well as undeveloped properties. Historical depletion
has not been included as the basis in the properties will be adjusted in the
purchase price allocation. Therefore historical depletion will no longer be
relevant. Income tax expense has not been presented as it has not historically
been allocated to the property level.

REVENUE RECOGNITION

Revenues are recognized when oil and gas production is sold. Included
in revenues is $628,000, which represents processing and gathering fees. Direct
operating expenses are accrued when services are provided. Included in direct
operating expenses is $595,000 of costs associated with processing and
gathering.

USE OF ESTIMATES

Management has made a number of estimates and assumptions relating to
the reporting of assets, liabilities, revenues and direct operating expenses to
prepare these financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates.

(2) SALES TO MAJOR CUSTOMERS:

For the year ended December 31, 1995, five purchasers accounted
for 20%, 14%, 13%, 13% and 10% of oil and gas sales. For the three months
ended March 31, 1996, four purchasers accounted for 30%, 16%, 15% and 13%
of oil and gas sales.

F-42
93

THE BANNON INTERESTS

NOTES TO STATEMENT OF ASSETS
(OTHER THAN PRODUCTIVE OIL AND GAS PROPERTIES)
AND LIABILITIES AND STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES

(3) OIL AND GAS RESERVES INFORMATION (UNAUDITED):

The estimates of the Bannon Interests in proved oil and gas reserves,
which are located entirely in the United States, are based on evaluations by an
independent petroleum engineer. Reserves at December 31, 1995 were estimated in
accordance with guidelines established by the Securities and Exchange Commission
which require that reserve reports be prepared under existing economic and
operating conditions with no provision for price escalations except by
contractual arrangements.

Lomak's management emphasizes that reserve estimates are inherently
imprecise. Accordingly, the estimates are expected to change as future
information becomes available.

The following unaudited table sets forth the estimated proved oil and
gas reserve quantities of the Bannon Interests at December 31, 1995:

Crude Oil Natural Gas
(Bbls) (Mcfs)
---------- -----------
PROVED RESERVES
Balance, December 31, 1994 1,910,000 79,947,000
Purchases of reserves in place 382,000 16,676,000
Revisions of previous estimates 154,000 (5,557,000)
Production (74,000) (4,009,000)
---------- ----------
Balance, December 31, 1995 2,372,000 87,057,000
========== ==========

PROVED DEVELOPED RESERVES
Balance, December 31, 1995 848,000 43,567,000
========== ==========

The "Standardized Measure of Discounted Future Net Cash Flows Relating
to Proved Oil and Gas Reserves" (Standardized Measure) is a disclosure
requirement under Statement of Financial Accounting Standards No. 69. The
Standardized Measure does not purport to present the fair market value of proved
oil and gas reserves. This would require consideration of expected future
economic and operating conditions, which are not taken into account in
calculating the Standardized Measure.

Future cash inflows were estimated by applying year end prices,
adjusted for fixed and determinable escalations to the estimated future
production less estimated future production costs based on year end costs and
future development costs. Future net cash inflows were discounted using a 10%
annual discount rate to arrive at the Standardized Measure. Income taxes were
calculated without consideration of any remaining historical cost basis of the
Bannon Interests.

F-43

THE BANNON INTERESTS

NOTES TO STATEMENT OF ASSETS
(OTHER THAN PRODUCTIVE OIL AND GAS PROPERTIES)
AND LIABILITIES AND STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES

The standardized measure of discounted future net cash flows relating to
proved oil and gas properties is as follows:
As of
December 31,
1995
-------------------

Future cash inflows $ 190,089,000

Future costs:
Production (46,180,000)
Development (19,797,000)
------------

Future net cash flows 124,112,000

Income taxes (43,439,000)
------------

Undiscounted future net cash flows 80,673,000

10% discount factor (39,738,000)
------------
Standardized measure $ 40,935,000
============

Changes in standardized measure of discounted future net cash flows
from proved reserve quantities are as follows:

Year ended
December 31,
1995
-----------------

Standardized measure, beginning of year $ 28,523,000

Sales, net of production costs (4,036,000)
Purchases of reserves in place 14,898,000
Net change in prices and production costs (159,000)
Net change in income taxes (6,683,000)
Development costs incurred during the period 2,207,000
Changes in estimated future development costs 3,143,000
Revisions of quantity estimates (2,997,000)
Accretion of discount 2,852,000
Changes in production rates and other 3,187,000
------------

Standardized measure, end of year $ 40,935,000
============

During 1995, $302,000 of exploration costs were incurred.

F-44
95
No dealer, salesman or other person has been authorized to give any information
or to make any representation other than those contained in this Prospectus in
connection with the offer contained herein, and, if give or made, such
information or representation must not be relied upon as having been authorized
by the Company, the Stockholders or by any Underwriter. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, any
securities to which it relates, or an offer to sell, or a solicitation of an
offer to buy, in any jurisdiction in which it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
been no change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to its date.

TABLE OF CONTENTS

Available Information 4
Additional Information 4
Outstanding Securities Covered by This
Prospectus 5
Prospectus Summary 6
Risk Factors 12
The Company 15
Price Range of Common Stock and Dividend Policy 16
Capitalization 17
Use of Proceeds 17
Selected Historical and Pro
Forma Financial Data 18
Management's Discussion and Analysis of
Financial Condition and Results of Operations 19
Business 24
Management 36
Executive Compensation 39
Principal Stockholders and Share
Ownership of Management 43
Certain Transactions 44
Selling Securityholders 45
Description of Capital Stock 46
Shares Eligible for Future Sale 47
Legal Opinions 48
Experts 48
Glossary 49
Index to Consolidated Financial Statements
and Schedules F-1

5,000,000 OF COMMON SHARES
($.01 PAR VALUE PER SHARE)

LOMAK PETROLEUM, INC.

PROSPECTUS

July 16, 1996

===============================================================================

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered as follows:

Amount
------------

SEC Registration Fee $__________
Nasdaq Additional Listing Fees $__________
Printing and Engraving Costs $__________
Accounting Fees and Expenses $__________
Legal Fees and Expenses $__________
Blue-Sky Fees and Expenses (including legal fees) $__________
Transfer Agent's Fees and Expenses $__________
Miscellaneous Expenses $__________
Total $__________

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company is a Delaware corporation. Section 145 of the Delaware
General Corporation Law generally provides that a corporation is empowered to
indemnify any person who is made a party to a proceeding or threatened
proceeding by reason of the fact that he is or was a director, officer, employee
or agent of the corporation or was, at the request of the corporation, serving
in any of such capacities in another corporation or other enterprise. This
statute describes in detail the right of the corporation to indemnify any such
person. Article SEVENTH, section (5) the Company Certificate of Incorporation
provides:

Any former, present or future director, officer or employee of the
Company or the legal representative of any such director, officer, or employee
shall be indemnified by The Company

(a) against reasonable costs, disbursements and counsel fees paid or incurred
where such person has been successful on the merits or otherwise in any pending,
threatened or completed civil, criminal, administrative or arbitrative action,
suit or proceeding, and any appeal therein and any inquiry or investigation
which could lead to such action, suit or proceeding, or in defense of any claim,
issue or matter therein, by reason of such person being or having been such
director, officer or employee, and

(b) with respect to any such action, suit, proceeding, inquiry or investigation
for which indemnification is not made under (a) above, against reasonable costs,
disbursements (which shall include amounts paid in satisfaction of settlements,
judgments, fines and penalties, exclusive, however, of any amount paid or
payable to the Company) and counsel fees if such person also had no reasonable
cause to believe the conduct was unlawful, with the determination as to whether
the applicable standard of conduct was met to be made by a majority of the
members of the Board of Directors (sitting as a committee of the Board) who were
not parties to such inquiry, investigation, action, suit or proceeding or by any
one or more disinterested counsel to whom the question may be referred to the
Board of Directors; provided, however, in connection with any proceeding by or
in the right of the Company, no indemnification shall be provided as to any
person adjudged by any court to be liable for negligence or misconduct except as
and to the extent determined by such court.

The termination of any such inquiry, investigation, action, suit or
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent shall not of itself create a presumption that such
person did not meet the standards of conduct set forth in subsection (b) above.

II-1
97

Reasonable costs, disbursements and counsel fees incurred by such
person in connection with any inquiry, investigation action, suit or proceeding
may be paid by the Company in advance of the final disposition of such matter if
authorized by a majority of the Board of Directors (sitting as a committee of
the Board) not parties to such matter upon receipt by The Company of an
undertaking by or on behalf of such person to repay such amount unless it is
ultimately determined that such person is entitled to be indemnified as set
forth herein.

The Board of Directors may, at any regular or special meeting of the
Board, by resolution, accord similar indemnification (prospective or
retroactive) to any director, trustee, officer or employee of any other company
who is serving as such at the request of the Company because of the Company's
interest in such other company and any officer, director or employee of any
constituent corporation absorbed by the Company in a consolidation or merger, or
the legal representative of any such director, trustee, officer or employee.

The indemnification herein provided shall not exclude any other rights
to which such person may be entitled as a matter of law or which may be lawfully
granted.

Article XII of the Company's Bylaws, incorporating the above
provisions, provides for an indemnification agreement to be entered into by
directors' and designated officers of the Company. All directors of the Company
have executed an indemnification agreement the form of which was approved by
stockholders at the Company's 1994 annual stockholders meeting.

Article XII of the Company's Bylaws also allows the Company to purchase
liability insurance for Officers and Directors. As of the date hereof there is
no such insurance in place.

Article XIII of the Company's Bylaws, with certain specified
exceptions, limits the personal liability of the Directors to Lomak or its
stockholders for monetary damages for breach of fiduciary duty to the fullest
extent permitted by Delaware law, including any changes in Delaware law adopted
in the future.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
[ADD]

II-2
98

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits [update]

Exhibit No. Description
- ----------- -----------

1.1 Purchase Agreement dated October 31, 1995 among Lomak Petroleum, Inc., Forum Capital Markets L.P.
and Hanifen, Imhoff Inc. (20)
3.1(a) Certificate of Incorporation of Lomak dated March 24, 1980.(1)
3.1(b) Certificate of Amendment of Certificate of Incorporation dated July 22, 1981.(1)
3.1(c) Certificate of Amendment of Certificate of Incorporation dated September 8, 1982.(1)
3.1(d) Certificate of Amendment of Certificate of Incorporation dated December 28, 1988.(1)
3.1(e) Certificate of Amendment of Certificate of Incorporation dated August 31, 1989.(1)
3.2 By-Laws of Lomak.(1)
4. Specimen certificate of Lomak Petroleum, Inc. Common Stock.(1)
4.1(a) Certificate of Designation of Serial Preferred Shares - $9.00 (Series A) dated September 18, 1982.(1)
4.1(b) Certificate of Decrease of Serial Preferred Shares - $9.00 (Series A) dated June 24, 1983.(1)
4.1(c) Certificate of Designation, Voting Powers, Preferences and Rights of Serial Preferred Shares - $9.00
(Series B) dated June 24, 1983.(1)
4.1(d) Certificate of Decrease of Serial Preferred Shares - $9.00 (Series B) dated August 21, 1984.(1)
4.1(e) Certificate of Designation, Voting Powers, Preferences and Rights of Serial Preferred Shares - $9.00
(Series C) dated August 21, 1984.(1)
4.1(f) Certificate of Decrease of Serial Preferred Shares - $9.00 (Series C) dated April 30, 1985.(1)
4.1(g) Certificate of Designation, Voting Powers, Preferences and Rights of Serial Preferred Shares - $11.00
(Series D) dated April 30, 1985.(1)
4.1(h) Certificate of Decrease of Serial Preferred Shares - $9.00 (Series A) dated December 28, 1988.(1)
4.1(i) Certificate of Decrease of Serial Preferred Shares - $9.00 (Series B) dated December 28, 1988.(1)
4.1(j) Certificate of Decrease of Serial Preferred Shares - $9.00 (Series C) dated December 28, 1988.(1)
4.1(k) Certificate of Decrease of Serial Preferred Shares - $11.00 (Series D) dated December 28, 1988.(1)
4.1(l) Certificate of Designation, Voting Powers, Preferences and Rights of Serial Preferred Shares - $100
(Series E) dated December 28, 1988.(1)
4.1(m) Certificate of Designation, Voting Powers, Preferences and Rights of Serial Preferred Shares - $100
(Series F) dated December 28, 1988.(1)
4.1(n) Certificate of Increase and Amendment of Serial Preferred Shares - $100 (Series F).(1)
4.1(o) Certificate of Designation, Voting Powers, Preferences and Rights of Serial Preferred Shares - 8%
Cumulative Convertible $2.03 Preferred (Par Value $1.00 per share).(1)
4.1(p) Certificate of Amendment to Certificate of Incorporation dated May 17, 1991.(1)
4.1(q) Certificate of Designation, Voting Powers, Preferences and Rights of Serial Preferred Shares - 7-1/2%
Cumulative Convertible Exchangeable Preferred Stock, Series A. (1)
4.1(r) Certificate of Designation, Voting Powers, Preferences and Rights of Serial Preferred Shares - 7-1/2%
Cumulative Convertible Exchangeable Preferred Stock, Series B. (1)
4.1(s) Certificate of Designation, Voting Powers, Preference and Rights of Serial Preferred Shares - $2.03
Convertible Exchangeable Preferred Stock. (20)
4.1(t) Form of Indenture between Lomak Petroleum, Inc. and Keycorp. Shareholder Service, Inc. relating to the
8.125% Subordinated Convertible Notes due 2005. (20)
4.1(u) Registration Rights Agreement dated October 31, 1995 among Lomak Petroleum, Inc., Forum Capital
Markets L.P. and Hanifen, Imhoff Inc. (20)
5.* Opinion of Rubin Baum Levin Constant & Friedman.
10.1(a) Financial Restructuring Agreement dated September 29, 1988 between Lomak and Snyder Oil
Corporation ("SOCO").(1)
10.1(b) Loan Agreement dated September 29, 1988 between Lomak Petroleum (Ohio), Inc., SOCO and MBank
Fort Worth N.A. and First and Second Amendments thereto.(1)
10.1(c) Purchase and Sale Agreement dated February 28, 1989 between Lomak Petroleum (Ohio), Inc., Snyder
Operating Partnership L.P. and Snyder Oil Partners L.P.(1)
10.1(d) Incentive and Non-Qualified Stock Option Plan dated March 13, 1989.(1)
10.1(e) Advisory Agreement dated September 29, 1988 between Lomak and SOCO.(1)

II-3
99

10.1(f) 401(k) Plan Document and Trust Agreement effective January 1, 1989.(1)
10.1(g) 1989 Stock Purchase Plan.(1)
10.1(h) Purchase Agreement dated as of May 31, 1990 by and between Ameritrust Company National Association
and Lomak.(2)
10.1(i) Agreement dated May 30, 1990 and amended on June 5, 1990 by and among Lomak, as purchaser, and
Sankar V. Ramani, Appolo Energy Corporation, Monogram Oil & Gas, Inc., United Monogram Oil &
Gas Corporation, Balu Prabhakar, Rene Freiburghaus and Appalachian Exploration, Inc. as sellers.(2)
10.1(j) Purchase and Sale Agreement dated as of May 31, 1990 between United Monogram Oil & Gas
Corporation, as the sole shareholder of Appalachian Exploration, Inc., and Lomak.(2)
10.1(k) Oil and Gas Asset Purchase and Sale Agreement dated as of May 31, 1990 by and between Sankar V.
Ramani and Lomak.(2)
10.1(l) Oil and Gas Asset Purchase and Sale Agreement dated as of May 31, 1990 by and between Balu
Prabhakar and Lomak.(2)
10.1(e)(i) Agreement and Plan of Merger dated as of November 20, 1990 by and among the Company, Lomak
Acquisitions Corp. and DOIL.(1)
10.1(m) Stock Purchase Agreement dated February 16, 1990 and amended on April 1, 1990 by and among PEP
Joint Venture, DOIL, and certain security holders of DOIL.(3)
10.1(n) Agreement dated June 28, 1990 between Lomak and DOIL.(1)
10.1(o) Letter Agreement dated June 27, 1990 between SOCO and Lomak.(1)
10.1(p) Securities Purchase Agreement dated February 21, 1991 by and among the Company, Latoka and the
selling securities holders of Latoka. (4)
10.1(p)(i) Asset Purchase Agreement dated February 28, 1991 between the Company and Latoka. (1)
10.1(q) Proxies from Latoka Shareholders.(1)
10.1(aa) Lease Agreement dated September 1, 1986 between Three Lincoln Centre - A Joint Venture and Strong
Corporation.(5)
10.1(bb) Strong 1986-A Ltd., Agreement of Limited Partnership.(5)
10.1(cc) Strong 1986-A Ltd. Certificate of Limited Partnership.(5)
10.1(dd) Letter Agreement dated December 4, 1987 regarding $600,000.00 loan by Latoka, Inc., as borrower, to
Premier Bank, as lender.(5)
10.1(ee) Promissory Note dated December 4, 1987 regarding $600,000.00 loan by Latoka, Inc., as borrower, to
Premier Bank, as lender.(5)
10.1(ff) Estoppel Certificate of Borrower dated December 4, 1987 regarding $600,000.00 loan by Latoka, Inc., as
borrower, to Premier Bank, as lender.(5)
10.1(gg) Collateral Mortgage and Collateral Chattel Mortgage Note, Pledge Agreement and Collateral Mortgage
and Collateral Mortgage dated December 4, 1987 regarding $600,000.00 loan by Latoka, Inc., as
borrower, to Premier Bank, as lender.(5)
10.1(hh) Form for Deed of Trust, Security Agreement and Financing Statement (with Assignment of Production)
dated December 4, 1987 regarding $600,000.00 loan by Latoka, Inc., as borrower, to Premier Bank, as
lender.(5)
10.1(ii) Modification Agreement dated June 24, 1988 between Premier Bank, N.A. and Latoka, Inc.(5)
10.1(jj) Form of Warrant Agreement issued by Xenda Corporation.(6)
10.1(kk) Underwriters Warrant dated as of February 25, 1988 between Xenda Corporation and Capital First
Securities, Inc. (6)
10.1(ll) Selling and Agency Agreement effective May 15, 1989 between MLB Investments, Ltd., and Latoka.(7)
10.1(mm) Letter Agreement dated September 20, 1989 between MLB Investments, Ltd., and Latoka.(7)
10.1(nn) Management and Investment Agreement, dated as of November 20, 1990, between the Company and
SOCO.(8)
10.1(oo) Letter Agreement, dated May 17, 1991, between the Company and SOCO extending option period.(8)
10.1(pp) Purchase and Sale Agreement, dated as of June 20, 1991, between the Company and Taconic.(8)
10.1(qq) Amended and Restated Stock Purchase Agreement, dated as of November 20, 1990, between Sparton
Corporation, SOCO and the Company.(8)
10.1(rr) Purchase and Sale Agreement, dated as of March 14, 1991, between Michigan Oil Company and
Albercan Oil Corporation ("Albercan").(8)
10.1(ss) Share Purchase and Sale Agreement, dated March 14, 1991, among SOCO, the Company and Albercan.(8)
10.1(tt) Purchase and Sale Agreement, dated March 15, 1993 between Lomak Petroleum, Inc. and Valley
Resources, Inc. (9)

II-4
100

10.1(uu) Purchase and Sale Agreement, dated March 15, 1993 between Lomak Petroleum, Inc. and Valley Oil and
Gas, a Partnership. (9)
10.1(vv) Loan Agreement dated May 25, 1993 between Lomak and Bank One, Texas, N.A. (10)
10.1(ww) Amendment dated August 8, 1993 to Loan Agreement dated May 25, 1993 between the Company and Bank
One, Texas, N.A.(10)
10.1(xx) Letter of Intent, dated September 20, 1993 between the Company and Mark Resources Corporation.(10)
10.1(yy) Acquisition Agreement, dated October 16, 1993, among the Company, the Shareholders and Option Holders
named therein, and Mark Resources Corporation.(11)
10.1(zz) Form of Consulting Agreement between the Company and Peter M. Mark.(12)
10.2(a) Amendment dated November 12, 1993 to Loan Agreement dated May 25, 1993 between the Company and
Bank One, Texas, N.A.(13)
10.2(b) Form of Directors Indemnification Agreement (14)
10.2(c) Acquisition Agreement dated as of February 8, 1994 among the Company, the Shareholders named therein
and Grand Banks Energy Company (14)
10.2(d) Amendment dated March 7, 1994 to Loan May 25, 1993 Agreement dated between the Company and Bank
One, Texas, N.A. (15)
10.2(e) 1994 Outside Directors Stock Option Plan. (16)
10.2(f) 1994 Stock Option Plan. (16)
10.2(g) Amended and Restated Revolving Credit and Term Loan Agreement dated July 6, 1994 between Lomak
Petroleum, Inc. and Bank One, Texas N.A. and Texas Commerce Bank National Association. (17)
10.2(h) First Amendment to Amended and Restated Revolving Credit and Term Loan Agreement dated October 20,
1994 between Lomak Petroleum, Inc. and Bank One Texas, N.A. and Texas Commerce Bank National
Association. (17)
10.2(i) Agreement and Plan of Merger dated as of October 28, 1994 between Registrant and Red Acquisition Corp.
and Red Eagle Resources Corporation. (17)
10.2(j) Second Amendment to Amended and Restated Revolving Credit and Term Loan Agreement dated December
30, 1994 between Lomak Petroleum, Inc. and Bank One Texas, N.A. and Texas Commerce Bank National
Association. (18)
10.2(k) Third Amendment to Amended and Restated Revolving Credit and Term Loan Agreement dated January 25,
1995 between Lomak Petroleum, Inc. and Bank One Texas, N.A. and Texas Commerce Bank National
Association. (18)
10.2(l) Second Amended and Restated Revolving Credit and Term Loan Agreement dated December 20, 1995
between Lomak Petroleum, Inc., Lomak Operating Company, Lomak Production Company, Lomak
Resources Company and Red Eagle Resources Corporation; Bank One, Texas N.A., Texas Commerce Bank
National Association, Nationsbank of Texas, N.A. and PNC Bank, National Association. (19)

II-5
101

10.2(m)* First Amendment to Second Amended and Restated
Revolving Credit and Term Loan Agreement dated April 24, 1996
between Lomak Petroleum, Inc., Lomak Operating Company, Lomak
Production Company, Lomak Resources Company, Red Eagle
Resources Corporation and Eastern Petroleum Company; Bank One,
Texas N.A., Texas Commerce Bank National Association,
Nationsbank of Texas, N.A. and PNC Bank, National Association.
22. Subsidiaries of the Registrant.(1)
24.1(a)* Consent of Rubin Baum Levin Constant & Friedman (included in Exhibit 5).
24.1(b)* Consent of Arthur Andersen LLP.
24.1(c)* Consent of Ernst & Young LLP.
24.1(d)* Consent of KPMG Peat Marwick LLP.

- ------------------

(1) Previously filed as Exhibit to the Company's Registration Statement, Registration Statement No. 33-31558.
(2) Incorporated by reference to the Company's Form 8-K dated May 31, 1990.
(3) Incorporated by reference to the Company's Form 8-K dated May 31, 1990.
(4) Incorporated by reference to the Company's Form 8-K dated March 15, 1990.
(5) Previously filed as exhibit to Xenda Corporation Form S-4 filed July 26, 1988, as amended, and incorporated herein by
reference.
(6) Previously filed as exhibit to Xenda Corporation Form S-18 filed January 26, 1988, as amended, and incorporated
herein by reference.
(7) Previously filed as exhibit to Latoka, Inc. Form 10-Q for the quarter ended September 30, 1989, and incorporated
herein by reference.
(8) Incorporated by reference to the Company's Form 8-K dated August 5, 1991.
(9) Incorporated by reference to the Company's Form 8-K dated April 26, 1993 as amended by Form 8 dated June 23, 1993.
(10) Incorporated by reference to the Company's Registration Statement No. 33-70462 filed on October 18, 1993.
(11) Incorporated by reference to the Company's Pre-Effective Amendment No. 1 dated November 9, 1993, to the Company's
Registration Statement No. 33-70462.
(12) Incorporated by reference to the Company's Post-Effective Amendment No. 1 dated December 10, 1993, to the Company's
Registration Statement No. 33-70462.
(13) Incorporated by reference to the Company's Post-Effective Amendment No. 2 dated January 27, 1994.
(14) Incorporated by reference to the Company's Form 8-K dated February 11, 1994.
(15) Incorporated be reference to the Company's Form 10K for the year ended December 31, 1993, and incorporated
herein by reference.
(16) Incorporated by reference to the Company's Post-Effective Amendment No. 4 dated May 3, 1994.
(17) Incorporated by reference to the Company's Form S-4 dated December 13, 1994.
(18) Incorporated be reference to the Company's Form 10K for the year ended December 31, 1994, and incorporated
herein by reference.
(19) Incorporated be reference to the Company's Form 10K for the year ended December 31, 1995, and incorporated
herein by reference.
(20) Incorporated by reference to the Company's Form S-3 dated November 15, 1995.

* Filed herewith.

II-6
102

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:

(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
and of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.

(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered therein and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.

(3) To remove from Registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant, the registrant has been advised that is the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

II-7
103

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant has caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized in the City of Forth Worth, State of
Texas on July 16, 1996.

LOMAK PETROLEUM, INC.

BY:/S/ JOHN H. PINKERTON
-----------------------------------
John H. Pinkerton
President and
Chief Executive Officer
(Principal Executive Officer)

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas J. Edelman and John H. Pinkerton,
or any of them, each with power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all subsequent pre-and post-effective amendments and supplements to this
Registration Statement, and to file the same, or cause to be filed the same,
with all exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto each said attorney-in-fact and
agent full power to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that any said attorney-in-fact and agent or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

II-8
104

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE Title Date

- ---------------------------------------------------------------------------------------------------

/s/ Thomas J. Edelmen Chairman and Director July 16, 1996
- ------------------------------------------
Thomas J. Edelmen

President, Chief Executive Officer and July 16, 1996
/s/ John H. Pinkerton Director (Principal Executive Officer)
- ------------------------------------------
John H. Pinkerton

/s/ C. Rand Michaels Vice Chairman and Director July 16, 1996
- ------------------------------------------
C. Rand Michaels

/s/ Robert E. Aikman Director July 16, 1996
- ------------------------------------------
Robert E. Aikman

/s/ Allen Finkelson Director July 16, 1996
- ------------------------------------------
Allen Finkelson

/s/ Anthony V. Dub Director July 16, 1996
- ------------------------------------------
Anthony V. Dub

/s/ Ben A. Guill Director July 16, 1996
- ------------------------------------------
Ben A. Guill

Vice President - Finance and Chief July 16, 1996
Financial Officer (Principal Financial
/s/ Thomas W. Stoelk Officer)
- ------------------------------------------
Thomas W. Stoelk

Controller and Chief Accounting Officer July 16, 1996
/s/ John R. Frank (Principal Accounting Officer)
- ------------------------------------------
John R. Frank

II-9
105

EXHIBIT INDEX

Exhibit No. Description
- ----------- -----------

5. Opinion of Rubin Baum Levin Constant & Friedman.

10.2(m) First Amendment to Second Amended and Restated Revolving Credit and Term Loan
Agreement dated April 24, 1996 among Lomak Petroleum, Inc., Lomak Operating
Company, Lomak Production Company, Lomak resources Company, Red Eagle
Resources Corporation, and Eastern Petroleum Company; Bank One, Texas, N.A.,
Texas Commerce Bank National Association, Nationsbank of Texas, N.A. and PNC
Bank, National Association.
24.1(a) Consent of Rubin Baum Levin Constant & Friedman (included in Exhibit 5).
24.1(b) Consent of Arthur Andersen LLP
24.1(c) Consent of Ernst & Young LLP
24.1(d) Consent of KPMG Peat Marwick LLP

   1

                                                                      Exhibit 5.


   2

                                  July 16, 1996

Lomak Petroleum, Inc.
500 Throckmorton Street
Fort Worth, Texas  76102

                  Re:  Registration Statement on Form S-1
                       of Lomak Petroleum, Inc. (THE "REGISTRATION STATEMENT")

Dear Sirs:

         We refer to the Registration Statement filed by Lomak Petroleum, Inc.,
a Delaware corporation (the "Company"), with the Securities and Exchange
Commission for the purpose of registering under the Securities Act of 1933, as
amended (the "Act"), 5,000,000 shares of the Company's Common Stock, $.01 par
value per share (the "Shares").

         As counsel to the Company, we have examined such corporate records,
documents, agreements and such matters of law as we have considered necessary or
appropriate for the purpose of this opinion.

         Based on the foregoing, we are of the opinion that the Shares have been
duly authorized and will, when issued as contemplated in the Registration
Statement, be validly issued, fully paid and nonassessable.

         We are members of the New York Bar, and the opinions expressed herein
are limited to questions arising under the laws of the State of New York, the
General Corporation Law of the State of Delaware and the Federal law of the
United States, and we disclaim any opinion whatsoever with respect to matters
governed by the laws of any other jurisdiction.

         We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the caption
"Legal Matters" in the Prospectus which is a part of the Registration Statement.
In giving this consent we do not thereby agree that we come within the category
of persons whose consent is required by the Act or the Rules thereunder.

                                    Very truly yours,

                                    RUBIN BAUM LEVIN CONSTANT & FRIEDMAN

   1

                                                                 Exhibit 10.2(m)


   2




                    REVOLVING CREDIT AND TERM LOAN AGREEMENT
                    ----------------------------------------

         This First Amendment to Second Amended and Restated Revolving Credit
and Term Loan Agreement (this "AMENDMENT") is entered into on April 24, 1996, by
LOMAK PETROLEUM, INC., LOMAK OPERATING COMPANY, LOMAK PRODUCTION COMPANY, LOMAK
RESOURCES COMPANY, RED EAGLE RESOURCES CORPORATION, and EASTERN PETROLEUM
COMPANY (each as "BORROWER" and collectively the "BORROWERS"); BANK ONE, TEXAS,
N.A., TEXAS COMMERCE BANK NATIONAL ASSOCIATION, NATIONSBANK OF TEXAS, N.A., and
PNC BANK, NATIONAL ASSOCIATION (each a "BANK" and collectively the "BANKS"); and
BANK ONE, TEXAS, N.A., as agent for the Banks (in such capacity, "AGENT").

RECITALS:

1 The Banks along with the Borrowers are parties to a Second Amended and
Restated Revolving Credit and Term Loan Agreement dated December 20, 1995 (the
"LOAN AGREEMENT").

         B. The Loan Agreement provides that the Banks will make Revolving Loans
to the Borrowers (excluding Eastern Petroleum Company) in an aggregate principal
amount at any one time outstanding (inclusive of the Letter of Credit Exposure)
equal to the lesser of the Borrowing Base or $250,000,000. The Borrowing Base
determined by the Banks presently is $105,000,000. The Banks have agreed to
increase the Borrowing Base to $150,000,000 on the terms and conditions set out
below.

         C. Lomak Petroleum, Inc. previously acquired Eastern Petroleum Company,
an Ohio corporation, pursuant to an Acquisition Agreement dated January 23, 1996
(the "EASTERN AGREEMENT"). The assets of Eastern Petroleum Company include oil
and gas properties in Trumbull, Ashtabula, Cuyahoga, Geagua, Mahoning, Portage,
and Noble Counties, Ohio (the "Eastern Assets"). The Banks agree to include the
Eastern Assets in their determination of the Borrowing Base although the Banks
are not requiring the Borrowers to mortgage the Eastern Assets at this time.

         D. Eastern Petroleum Company, an Ohio corporation, has agreed to 
become a Borrower.

         E. Lomak Petroleum, Inc. has entered into a Purchase and Sale Agreement
dated April 4, 1996, with Bannon Energy Incorporated (the "BANNON AGREEMENT")
pursuant to which Lomak Petroleum, Inc. or one or more of the other Borrowers
will acquire certain oil and gas properties in New Mexico, Oklahoma, Texas, and
Wyoming (the "BANNON ASSETS"). The Banks agree to include the Bannon Assets in
their determination of the Borrowing Base although the Banks are not requiring
the Borrowers to mortgage the Bannon Assets at this time.

         F. The Borrowers and the Banks desire to amend the Loan Agreement to 
reflect the matters set forth above.

AGREEMENTS:
- ----------

         In consideration of the funds advanced by the Banks to the Borrowers
under the Notes and other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Borrowers and the Banks agree as follows:

         1.       DEFINITIONS. The terms used in this Amendment shall have the 
same meanings as provided therefor in the Loan Agreement, unless the context
hereof otherwise requires or provides.

         2.       AMENDMENTS TO SECTION 1.01 OF THE LOAN AGREEMENT.  Effective 
as of the date of this Amendment, Section 1.01 of the Loan Agreement is amended
as follows:

         (a)      The definition of "BORROWER" is amended to read as shown 
                  below:

                          "BORROWER" means any of Petroleum, Operating,
                  Production, Resources, Red Eagle, or Eastern, and "BORROWERS"
                  means all of them.

         (b)      The following definition is added to Section 1.01 between 
the definitions of "ERISA" and "EURODOLLAR RESERVE PERCENTAGE":



                                       1
   3




                       "EASTERN" means Eastern Petroleum Company, an Ohio 
Corporation.

         3.       AMENDMENT TO SECTION 3.01 OF LOAN AGREEMENT.  Effective as of 
the date the Borrowers fully satisfy the conditions precedent set out in
paragraph 5 below, subsection (c) of Section 3.01 of the Loan Agreement is
amended to read as follows:

                           "(c) The Borrowing Base shall be $150,000,000 until 
                  the next Determination Date."

         4.       AMENDMENT TO SECTION 6.01 OF THE LOAN AGREEMENT.  Effective 
as of the date of this Amendment, paragraph (9) of subsection (a) of Section
6.01 of the Agreement is amended to read as follows:

                           "(9) The Borrowers have no wholly owned Subsidiaries
                  except (i) Petroleum whose wholly owned Subsidiaries are
                  Border Resources, Inc., a Delaware corporation; Buffalo Oil
                  Field Services, Inc., an Ohio corporation; Eastern Petroleum
                  Company, an Ohio corporation; LPI Acquisition, Inc., a Texas
                  corporation; Lomak Acquisition Corp., a Delaware corporation;
                  Lomak Operating Company, an Ohio corporation; Lomak Production
                  Company, a Delaware corporation; and Red Eagle Resources
                  Corporation, a Delaware corporation; (ii) Eastern whose wholly
                  owned Subsidiaries are Commodore Estates, Inc., Whitewood
                  Resources, Inc., and Eastwash Corporation, all Ohio
                  corporations; (iii) Operating whose wholly owned Subsidiary is
                  Lomak Resources Company, a Delaware corporation; and (iv) Red
                  Eagle whose wholly owned Subsidiary is Talon Trucking
                  Company."

         5.       CONDITIONS PRECEDENT TO BORROWING BASE INCREASE. The Banks 
will not increase the Borrowing Base in connection with this Amendment until the
following items have been furnished to the Banks, acceptable to the Banks in
their sole discretion and properly executed and acknowledged where required, and
the Banks have had a reasonable opportunity to examine them:

         (a)      This Amendment;

         (b) Four Revolving Promissory Notes dated as of the date hereof,
executed by the Borrowers, one payable to Bank One for $87,500,000, one payable
to TCB for $87,500,000, one payable to NationsBank for $50,000,000, and one
payable to PNC for $25,000,000;

         (c)      A Statute of Frauds Notice;



                                       2
   4

         (d) Copies of all resolutions adopted by the Board of Directors of the
Borrowers approving this Amendment and the transactions contemplated thereby,
certified by the Secretary or an Assistant Secretary of the pertinent party;

         (e) Copies of all resolutions adopted by the Board of Directors of the
Borrowers approving the Eastern Agreement and the Bannon Agreement, and the
transactions contemplated thereby, certified by the Secretary or an Assistant
Secretary of the pertinent party;

         (f) Evidence satisfactory to the Banks, in their sole discretion, that
there have been no material amendments or modifications to the Bannon Agreement
and that closing as contemplated by the Bannon Agreement has occurred in
accordance with that agreement;

         (g) Evidence satisfactory to the Banks, in their sole discretion, that
the Borrowers have acquired good and indefeasible title to the Eastern Assets
and the Bannon Assets evaluated by the Banks and reflected in the engineering
reports provided by the Borrowers to the Banks, subject only to Permitted
Encumbrances;

         (h) A certificate from the Borrowers that the conditions prescribed in 
Section 5.02(a) of the Agreement exist;

         (i) Good standing certificates and tax certificates for Eastern from
the Secretary of State of Ohio, dated not more than 15 days prior to the date of
this Amendment;

         (j) A certificate of incumbency for Eastern;

         (k)  A copy of Eastern's bylaws, certified by the Secretary or an 
Assistant Secretary of Eastern to be true and correct; and

         (l) An opinion of the law firm of Rubin Baum Levin Constant & 
Friedman stating substantially as follows:

                  (1) Petroleum has acquired Eastern, and Eastern is a
wholly-owned subsidiary of Petroleum;

                  (2) Eastern has no wholly-owned Subsidiaries other than
Commodore Estates, Inc., Whitewood Resources, Inc., and Eastwash Corporation,
all Ohio corporations;

                  (3) Eastern is a corporation duly incorporated, validly
existing and in good standing under the laws of Ohio and has full corporate
power and authority to own, lease, or mortgage its assets and properties and to
carry on its business as now conducted;

                  (4) The Loan Agreement, this Amendment, the Notes, and all
documents previously or subsequently executed by one or more of the Borrowers in
favor of the Banks constitute the legal, valid, and binding obligations of the
parties, enforceable against the appropriate parties in accordance with their
terms, except as enforceability thereof may be limited by (x) bankruptcy,
insolvency, reorganization, receivership, fraudulent conveyance, moratorium or
other laws relating to or affecting creditors' rights generally, (y) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and (z) an implied covenant of good faith and
fair dealing; and

                  (5) To the best of their knowledge, there is not pending
(excluding actions not served) any judicial, administrative, or arbitral action,
suit, proceeding, or claim against or investigation of any of the Borrowers
which questions the validity of the Eastern acquisition or the documents
executed by any of the Borrowers in favor of the Banks.

         6. CONFIRMATION OF LOAN AGREEMENT AND OTHER MATTERS. The Borrowers
certify that the warranties and representations of the Loan Agreement remain
true and correct and that they are not in default under the Loan Agreement.
Except as amended herein, the Loan Agreement shall remain as originally written;
and the Borrowers ratify the Loan Agreement, as amended by this Amendment. Each
Borrower reaffirms Section 6.01(a) (12) of the Loan Agreement and, effective as
of the date of closing of the Bannon Agreement, warrants and represents that it
has good and indefeasible title to all material assets purported to be owned by
it, including the Eastern Assets and the Bannon Assets reflected in the
engineering reports furnished to the Banks and relied upon by them to determine
the Borrowing Base set out above, subject only to Permitted Encumbrances.

         7. COUNTERPART EXECUTION. To facilitate execution, this Amendment may
be executed in as many counterparts as may be required. It shall not be
necessary that the signature of, or on behalf of, each party, or that the
signatures of all persons



                                       3
   5




required to bind any party, appear on each counterpart. Instead, it shall be
sufficient that the signature of, or on behalf of, each party, or the signatures
of persons required to bind any party, appear on one or more of the
counterparts. All counterparts shall collectively constitute a single agreement.
It shall not be necessary in making proof of this Amendment to produce or
account for more than a number of counterparts containing the respective
signatures of, or on behalf of, all of the parties hereto. Any signature page to
any counterpart may be detached from such counterpart without impairing the
legal effect of the signatures thereon and thereafter attached to another
counterpart identical thereto except having attached to it additional signature
pages.

         8. GOVERNING LAWS. THIS AMENDMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA AND SHALL BE PERFORMED IN TARRANT COUNTY, TEXAS.

         9. FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.

         Executed as of the date first written above.



BORROWERS:
- ---------

                                     
LOMAK PETROLEUM, INC.                       LOMAK RESOURCES COMPANY

By:                                             By:
   ---------------------------------               ---------------------------------
         John H. Pinkerton,                             John H. Pinkerton,
         President                                      President

LOMAK OPERATING COMPANY                     RED EAGLE RESOURCES CORPORATION

By:                                             By:
   ---------------------------------               ---------------------------------
         John H. Pinkerton                              John H. Pinkerton,
         President                                      President

LOMAK PRODUCTION COMPANY                    EASTERN PETROLEUM COMPANY

By:                                             By:
   ---------------------------------               ---------------------------------
         John H. Pinkerton,                             John H. Pinkerton,
         President                                      President




                                       4
   6

                             AGENT:
                             -----

                             BANK ONE, TEXAS, N.A.

                                      By:
                                         ----------------------------------
                                      Brad Bartek,
                                      Vice President

                             BANKS:
                             -----

                             BANK ONE, TEXAS, N.A.

                                      By:
                                         ----------------------------------
                                              Brad Bartek,
                                              Vice President

                             TEXAS COMMERCE BANK
                             NATIONAL ASSOCIATION

                                      By:
                                         ----------------------------------
                                              Timothy E. Perry,
                                              Senior Vice President

                             NATIONSBANK OF TEXAS, N.A.

                                      By:
                                         ----------------------------------
                                              J. Scott Fowler,
                                              Vice President    

                             PNC BANK, NATIONAL
                             ASSOCIATION

                                      By:
                                         ----------------------------------
                                              Michael J. Beyer,
                                              Vice President





                                       5

   1




                                                                 Exhibit 24.1(b)


   2

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated February 27,1996 (and to all references to our Firm) included in or made a
part of this Registration Statement on Form S-1.

                                                             ARTHUR ANDERSEN LLP

Cleveland, Ohio
July 12, 1996

   1


                                                                 Exhibit 24.1(c)


   2


                         CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-1) and related Prospectus of Lomak Petroleum,
Inc. for the registration of 5,000,000 shares of common stock and to the
inclusion therein of our report dated March 8, 1994 with respect to the
consolidated financial statements of Lomak Petroleum, Inc. for the year ended
December 31, 1993.

                                                               ERNST & YOUNG LLP

Cleveland, Ohio
July 12, 1996

   1



                                                                 Exhibit 24.1(d)


   2

                       CONSENT OF INDEPENDENT ACCOUNTANTS

The Board of Directors
Lomak Petroleum, Inc.:

We consent to the use of our report dated May 23, 1996, with respect to the
statement of assets (other than productive oil and gas properties) and
liabilities of the Bannon Interests as of December 31, 1995, and the related
statement of revenues and direct operating expenses for the year ended December
31, 1995, included herein and to the reference to our firm under the heading
"Experts" in the prospectus.

                                                           KPMG PEAT MARWICK LLP

Houston, Texas
July 15, 1996